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Utilitarian Economics 



A Series of Fifty Studies 
in Utilitarian Values 



Utilitarian Economics 



A SERIES OF FIFTY STUDIES IN 
UTILITARIAN VALUES 



Authors: 
F. WESLEY PHELPS 
J. BUCKNER MY RICK 



Copyrighted 1921 

The School of Utilitarian Economics 

826 Seaboard Bldg. 

Seattle, Wash. 



4 Fifty Lessons on Utilitarian Economics 

CONTENTS .<^A 
Man ^ 



CHAPTER ONE Page 

The story of the Detached Man 9 

Man's Relation to Things 19 

Responsibilities of Man . 24 

Man's Duty to Man 29 

Man's Inhumanity to Man 33 

Man's Duty to Self 39 

The Minimum Man 43 

Hhe Maximum Man 47 



Tools 

CHAPTER TWO 

9. Natural Weapons 60 

10. The Eye 66 

11. The Nose 70 

12. The Ears 73 

13. The Sense of Taste 76 

14. The Sense of Touch 80 

15. The Tools of LaJ)or 85 

16. The Tools of Agriculture ^--j, 90 

17. The Tools of Industry -1.--^ 94 

18. The Tools of Commerce — 98 

19. Tools of the Arts and Sciences 102 

20. The Tools of Construction 107 

21. Tools of Destruction 111 

Production 

CHAPTER THREE 

22. Who is a Producer?— . 115 

23. Nature's Share in Production 123 

C1A690662 DEC 21 '22 



From the ScJioot of Utilitarian Economics 5 

Page 

24. The Worker's Share in Production 128 

25. Capital's Share in Production 136 

26. The Thinker's Share in Production 144 

27. The Muscle's Share in Production 150 

28. Unfinished Things 153 

29. Finished Things 157 



Wealth 



CHAPTER FOUR 

30. What is Wealth? 161 

31. Users of Wealth 167 

32. Producers of Wealth 177 

33. Natural Wealth 183 

34. Owners of Wealth 187 

35. Idle Wealth 191 

36. The Function of Profits 199 

37. The Theory of Surplus Value 203 



Society 



CHAPTER FIVE 

38. Old and New Economics 207 

39. Economics and the Law 215 

40. Money and Wages 218 

41. Wages and Credit 221 

42. Wages and Commodity Prices 228 

43. Work and Health 232 

44. Work and Happiness 237 

45. Work, Wages and Time 241 

46. Work and Waste 245 

47. Capital's Cumulative Burdens 248 

48. Organized Society 251 

49. Luxuries 254 

50. Utilitarian Values 257 



Fifty Lessons on Utilitarian Economics 



Preface 



The purpose of ithese studies in Utilitar- 
ian Economics is to put the student in 
touch with certain basic truths which in- 
here in our daily experiences and lie close 
to the human heart. 

Economics is the broadest of our sci- 
ences. . / 

It is the science of everything, of indus- 
try, of business, of law, of medicine, of re- 
ligions and moralities even, and equally 
interests and involves everybody. Indeed, 
it is not possible to discuss any human in- 
stitution, or the life and work of any indi- 
vidual, whether of humble or of high sta- 
tion, without considering the economic 
value of the thing or person we discuss; 
and economic values are important to us 
in proportion to their usefulness. 

In this series of Fifty Lessons we have 
sought to make Economics as simple as the 
routine of each man's day, whether in field, 
factory, mine or elsewhere, for, in the final 
reckoning, these activities of busy men, 
workers and employers alike, make up the 
sum of the science we are discussing. 



From the School of Utilitarian Economics 7 

We want to help men and women find 
themselves, and to understand their rights 
and their responsibilities as members of 
organized society. 

There are many persons and many things 
around us. 

The human family was well on its way 
when we arrived. Men and women, toil- 
ing and sacrificing through many cen- 
turies, helped to make the way easier for 
us. Sometimes it seems that most of the 
necessary things have already been done, 
so far as our well-being is concerned, and 
that there isn't a great deal left for us to 
do, except, perhaps, to show our gratitude 
by wisely using what we have. 

If we are too much inclined to quarrel 
about the existing economic order, it is 
mainly because we do not understand. Let 
us be fair. Let us face the situation as it 
is, study it, find ourselves, our places and 
our duties in society, and then, gathering 
courage from a new and broader under- 
standing of life in all its relations, address 
ourselves seriously to the problem of mak- 
ing ourselves and our neighbors useful, 
prosperous and happy. 

Such is the supreme object of Utilitarian 
Economics as outlined in these lessons, and 
if we can help any considerable number of 



8 Fifty Lessons on Utilitarian Economics 

students to realize the beauty and value of 
this healthier and happier view of human 
relations we shall feel amply rewarded. 

In the first series of lessons we shall dis- 
cuss Man, You are one of the men we have 
in mind. All we say about man applies to 
you. 

In the second series of lessons we will 
talk about Tools — your tools, the tools you 
are using in your effort to realize your life 
mission. And in subsequent lessons we 
shall consider what you, the Man, have been 
doing with your tools, what you have been 
making with them, how much you are do- 
ing for yourself and for society in return 
for what has been done for you. These 
subsequent lessons will deal with Produc- 
tion, Wealth and Society, and will help to 
perfect a comprehensive outline of Eco- 
nomics. 



From the School of Utilitarian Economics 



The Story of the Detached Man 

An Introduction to Utilitarian Economics — Man Consid- 
ered as Wholly Detached, Having No Connection With Any- 
body or Anything — Some of His Embarrassments — What 
He Finds in the World — Nothing Yet Contributed By His 
Talent or Energy — Theory of Worker's Right to Total Prod- 
uct of His Labor Tested — How the Value of Worker's Labor 
is Divided Between Yesterday, Today and Tomorrow — Our 
Obligations to Society for What We Find Ready for Our 
Use and Comfort. 

Lesson No. 1 

Among current and popular errors in 
thinking and talking on economies is the 
notion that a man who labors is entitled to 
the full product of his labor. 

Put in another way, the idea is that no 
man should make a profit out of another 
man's work. 

This error underlies the whole attack on 
the wage system, and furnishes a sort of 
ground-work for the philosophy of radical 
economics. 

The number of men who very earnestly 
believe they should reap the full benefit of 
all they produce is very large. 

Behind this error the fight of the work- 
ers in America, and in other countries also, 
is waged for the possession and ownership 
of all the tools and agencies used in the 
production and distribution of wealth. It 
is the supreme and final motive of the whole 
conflict. 



10 Fifty Lessons on Utilitarian Economics 

Our purpose in the first lesson will be to 
put this notion to a practical test. 

Errors become very useful when we 
know them as errors. But errors are very 
harmful when we make them the basis 
for opinions on subjects of profound and 
intimate concern to us, and they become 
even more harmful when we permit them 
to determine our course of conduct in our 
relations to our fellows. 

It may help us to a better understanding 
of the forces and problems we are to dis- 
cuss in this series of studies in Popular and 
Simplified Economics if, at the beginning, 
we use our imagination for purely illustra- 
tive purposes. 

We will imagine an impossible man in a 
possible situation. 

We will speak of him as the Detached 
Man. Detached means not attached. Our 
Detached Man, therefore, has no connec- 
tion with anything or anybody. He is sim- 
ply here. But he 'is a complete man. He 
has ripened into the fullness of his powers ; 
his blood is clean, warm, buoyant; his mus- 
cles are hard, full, flexible; his mind is 
alert, hopeful, and he is contemplating the 
problem of fitting himself into our scheme 
of civilization — a very practical problem, 
and one with which our own experiences 



From the School of TJtilitarian Economics 11 

have made us familiar; indeed, not only 
was it the first problem to challenge our 
attention when we found ourselves, for the 
first time, facing the constant and pressing 
issues of the struggle for existence, but, in 
the midst of many changes, we have each 
day found the same problem looming to 
question us as to our fitness to go on with 
the fight for survival, and the light and 
beauty of a successful life. 

Contemplating this mighty problem, our 
Detached Man finds himself in the pres- 
ence of a vast and beautiful estate. For- 
ests have been mowed down ; lands cleared, 
ditches for drainage and canals for irriga- 
tion have been dug ; thrifty tillers have fur- 
rowed the soil; seeds have been sown, and, 
responsive to these touches of intelligent 
industry, the fields are smiling with ample 
crops. Orchards are colorful with clusters 
of ripening fruits. Contented herds are 
browsing in green pastures. Happy work- 
ers are singing as they dream of the har- 
vests. 

Woods and stones, and clays and metals 
have been fashioned into many useful 
shapes. 

Piles of gold and silver, of copper and 
iron, of coal and other things have been 
culled from nature's storehouse and con- 



12 Fifty Lessons on Utilitarian Economics 

verted into agencies of convenience and 
comfort. 

Great and pov^erful natural forces have 
been harnessed. The winds, the flow of 
streams and the movements of the tides 
are constantly contributing to the useful 
energies of mankind. 

Wild animals and fowls have been 
tamed, plants domesticated, and for ages 
have ministered to the needs and wants of 
humanity. 

Out of the raw, rough stuff of the wilder- 
ness, beautiful cities have been carved, and 
stand, like exquisite etchings, against the 
skyline. 

Roads have been built. 

Bridges span our rivers and low places. 
Tunnels have been bored through moun- 
tains. Combining intelligence and indus- 
try, we have ironed out many of the rough 
places in our main traveled roads. 

Other lines of communication, railroads, 
stage lines, air routes, steamships and 
steam boats are also open. Besides there 
are lines for the transmission of messages 
— telegraphs, telephones, cable lines and 
wireless systems. 

Our Detached Man finds society organ- 
ized, governments established and function- 
ing, and an endless variety of things, in- 



From the School of Utilitarian Economics 13 

stitutions, forces and customs all contribut- 
ing to the well-being and happiness of the 
human family. 

We have assumed the existence of a 
complete man, a person arrived at maturi- 
ty, able to think, talk and act with intelli- 
gence. We shall take no more than passing 
note of the obligations he has already in- 
curred ; the debts he owes for the care and 
attention bestowed upon him in infancy 
and childhood; for the food, and clothes, 
and shelter he has enjoyed; for the lan- 
guage which enables him to make known 
his wants and opinions; for the science of 
numbers which enables him to count; for 
the alphabet which has helped him to know 
and understand words and read books ; for 
calendars that divide time into years, weeks 
and days ; for clocks that tick off the hours, 
and minutes, and seconds of the day; and 
for many other things of constant use in 
our daily lives. These things, like the 
pavement on which he walks as he strolls 
through the city, are here and he may use 
them whether he works or idles, though he 
has had nothing to do with discovering or 
making any of these conveniences and 
necessities. 

Our test of the Detached Man, and his 
notion that a man who works is entitled to 



14 Fifty Lessons on Utilitarian Economics 

the full product of his labor, will have to 
do solely with Agriculture, Industry and 
Commerce, for his problem is to fit himself, 
according to his aptitudes, into one of these 
spheres of useful endeavor. 

Our friend is without food, without 
clothes, without shelter, and without tools 
with which to provide himself with these 
things. 

Food is an animal's first want. It is the 
infant's first demand when he comes pull- 
ing into the world of action. But if our 
friend goes to the butcher or baker he will 
find that his own economic philosophy has 
raised a barrier against him. The bread 
in the baker's window is not the product 
of our Detached Man's labor. It is not 
even the baker's. The baker merely finish- 
ed the processes of production. He mixed 
and kneaded the dough, and baked it. The 
baker did not grind the wheat grains into 
flour; nor did he build the mill or make 
any of the machinery that made this result 
possible. He did not plant, cultivate and 
harvest the wheat. He had nothing to do 
with transporting either the wheat or the 
flour, nothing to do with any of the things 
and forces that made transportation pos- 
sible. He did not produce the yeast or bak- 
ing powder, the sugar, the salt or the fats 



From the School of Utilitarian Economics 15 

he has used in the process of converting 
wheat flour into bread. He did not make 
the pans and ovens in which his bread is 
baked, nor did he produce any of the ma- 
terials entering into the manufacture of 
these necessary things. Nor did he pro- 
duce any of the agencies that provide him 
with the heat necessary to bake his bread. 

The hands of many men, toiling through 
a long series of years, reaching back to the 
first human being who first used grains of 
wheat as food and thus began the processes 
of domesticating a wild plant, have made 
possible the production of this loaf of bread. 

Indeed, if we should attempt to write a 
complete and truthful history of so simple 
and common a thing as a loaf of bread, it 
would be not only a history of all the more 
useful forces of civilization, but a history 
of natural forces also. 

Yet, nowhere along this far-reaching 
line, nowhere in the extensive and compli- 
cated processes finally to end in the produc- 
tion of a loaf of bread, has our friend con- 
tributed the weight of his hand, an ounce 
of energy, or the value or influence of a 
single idea. 

When we pass from the baker^s to the 
butcher's, we find our Detached Man fac- 
ing the same insurmountable barriers. 



16 Fifty Lessons on Utilitarian Economics 

He had no part in any of the long pro- 
cesses that have made it possible for the 
butcher to conclude the production of the 
pot-roast or the steak. 

Or if he needs clothes, he will find that 
even an humble worm, culling the fine fibre 
of mulberry leaves and making a silken 
nest of it, has contributed more toward 
clothing the human family than he has con- 
tributed, for nowhere in the infinite pro- 
cesses that have resulted in the production of 
clothes to keep the body warm can there be 
found the impress of his hands or his brain. 

Once again, therefore, his own economic 
philosophy looms as a barrier to stay his 
hands when he reaches for what he wants, 
needs and must have, if he is to thrive and 
hold his own in the raw, hard struggle for 
the right to survive. 

In the presence of such helplessness as 
we find in the assumed case of our Detach- 
ed Man in his efforts to procure food and 
clothing, our first natural thought is of 
Tools. Strip a strong, healthy, intelligent 
man of clothes and deny him food, but 
give him tools, and he might be able to 
provide what he needs for sustenance in a 
raw environment. 

But our friend had nothing to do with 
making the tools we use. 



From the ScJwol of Utilitarian Economics 17 

These tools, too, came down to us through 
long ages of human effort, labor and sacri- 
fice, and make up the biggest and most 
important thing of our inherited estate. 

If our Detached Man believes he is en- 
titled to the full product of his own labor, 
then he must also believe that he is not 
entitled to any of the products of any other 
man's labor, whether Physical or Mental. 

The plain, inevitable logic of the theory 
is the Complete exclusion of the Detached 
Man from the benefits of the things we 
have inherited. 

Our economic obligations fall into three 
grand periods of time: Yesterday, Today 
and Tomorrow; and any theory which fails 
to take this vital fact into account is un- 
sound.. Out of Today's labor, in whatever 
sphere we may expend it, we must make 
a fair return for what we have borrowed 
from Yesterday, and thus help along the 
movements that will enable Tomorrow to 
meet its obligations as Yesterday and To- 
day have met theirs. Today is not an 
isolated instant; it is a pulsing and vital 
part of the great flood of Time that flows 
out of Yesterday into Today, and must 
flow out of Today into Tomorrow. 

The man who fails to project his life 
into these three periods we speak of — Yes- 



18 Fijty Lessons on Utilitarian Economics 

terday, Today and Tomorrow, misses the 
larger part of his inheritance, just as the 
man who lives only for self misses the 
sweetest part of life; for the thing that 
glows longest and brightest for us is the 
unselfish thing we do for others. 

The error in the theory of our Detached 
Man is fundamental. It fails to take into 
account lifers most sacred obligations. Sure- 
ly we owe something for the conveniences, 
comforts and beauties that surround us; 
somebody toiled and suffered that we might 
have these things, and we, in our time, 
must make a fair return for them. We 
must pass it on to the men and women who 
are to come after us. Men and women 
who left us this inheritance of things, and 
forces, and institutions, gave more to the 
estate than they took from it, and if we 
fail to do likewise we will shirk a sacred 
and vital obligation and may put the plight 
of a curse on future generations. 

This preliminary lesson, in which a lit- 
tle fancy has been mixed with facts, will 
lose much of its meaning for us if it fail 
to encourage a sober, earnest and honest 
consideration of the big and basic problem 
of Production, and our intimate and vital 
relation to it. 



From the School of Utilitarian Economics 19 



Man's Relation to Things 



Man's Relation to Things — The Private Property Prin- 
ciple — Law of Things — What a Man Owes to the Tools and 
Other Conveniences Used in Industry and Business — In- 
efficiency is Waste of Man-Power. 

Lesson No. 2 

In our jurisprudence we recognize the 
Law of Things as well as the Law of Per- 
sons. Among other useful purposes^ this 
Law of Things gives a definite legal status 
to property and defines the legal rights 
growing out of the ownership or possession 
of property. 

In our economics also we recognize what 
we may call the Law of Things, though in 
its economic meaning this law is in some 
respects much broader than the Law of 
Things as we know it in the body of our 
civil jurisprudence. 

The introductory lesson to these studies 
in Utilitarian Economics puts us in touch 
with some of the relations which exist be- 
tween persons and things. These relations 
are iso real, so necessary and so vital that 
they assume the dignity and importance of 
laws for economic purposes. 

A man wholly detached from the things 
of modern society is unthinkable. 



20 Fifty Lessons on Utilitarian Economics 

Each person in our social organization is 
a necessary part of the organization, and is 
involved in all the forces and agencies 
which make up 'the sum of our industrial 
activities. 

We are familiar with the example where 
the lack of a nail meant the lack of a shoe 
on the horse's foot, and the lack of a shoe 
meant the lack of a horse, and the lack of a 
horse meant the loss of a battle. 

It is so in industry. Each man must as- 
sume his place and fill the requirements of 
his position, else the output of the com- 
bined energies of all the other persons in 
the group will be less than it ought to be. 

It will show a loss, and this loss will fall, 
not exclusively upon the individual who is 
responsible for it, but upon the entire 
group to which he belongs, and often it will 
extend beyond this group to men employed 
in a chain of allied or dependent industries. 
Frequently one factory will depend quite 
as much upon another factory as one man 
will depend upon another man in industry. 
Vfe can readily see what would happen to 
American industries if all our coal mines 
should suddenly close, or if our railroads 
should suddenly become involved in a com- 
plete tie-up. The processes of stagnation 



From the School of Utilitarian Economics 21 

would at once set in, business would halt, 
prices would begin to soar, wages would 
decline, millions of men and women would 
be thrown out of employment, and in a 
short while thousands of persons would be 
on the verge of starvation. 

This brings us directly to a considera- 
tion of the worker's obligation to his job, 
and his intimate and consequential rela- 
tions to the things and forces around him. 

If a man labors with an ax or a saw, he 
should keep the tool sharp; otherwise the 
output of the day will be short. 

Good workers love the tools they work 
with. The locomotive engineer keeps his 
engine in condition, cleans it, oils it, shines 
it, pets it and pampers it, believing all the 
while it is the best and fleetest engine on 
the road. 

We have known linotype operators who 
would pound no more type of out of a Mer- 
genthaler in a given time than an old 
printer could pick out of the cases with his 
hands. Yet the machine was set to produce 
four or five times as much type. This is 
merely another stance of a man chopping 
wood with a dull ax. The operator, in the 
one case, and the chopper, in the other, are 
either inefficient as workmen, or they do 
not care enough about their work and their 



22 Fijty Lessons on Utilitarian Economics 

reputations as workmen to get close to the 
tools they use. They are not mindful of 
their obligation to things. 

The wanton neglect or injury of a tool, 
whatever its character, is just as wasteful, 
from an economic standpoint and just as 
vicious, from a moral standpoint, as the de- 
struction of a building, or other physical 
property, by criminal violence. 

The same comment may be made on the 
wanton waste of good material, lumber, 
cloth or what not, in the processes of manu- 
facture. Of course, a distinction must be 
made, in morals, between waste that is due 
to ignorance and inefficiency, and waste 
that is deliberate and purposeful; but in 
either case the result is the same from an 
economic standpoint. It is sheer waste, 
and waste always is a tax which must be 
borne by both the producing and consum- 
ing classes of society. 

But the workers' waste is not the only 
waste that burdens our economic system. 

We will take only passing note of the 
vast number of men and women who, in 
season and out, may be regarded as time 
wasters. These are the able-bodied idlers, 
the do-nothings of our social system, men 
and women who perform no useful work, 
and make no return to organized society 



From the School of Utilitarian Economics 23 

for the benefits and blessings it bestows 
upon them. 

There are certain forms of waste, enor- 
mously hurtful and highly reprehensible, 
that are not violative of any of our com- 
mon standards of conduct in business and 
industry. The money hoarder belongs to 
this class, for to permit money to remain 
idle is a waste of useful energy. Persons 
who permit land and other property to re- 
main idle and unproductive are also wast- 
ers of this class, and these wasters deserve 
censure and condemnation just as much 
as the worker who fails to use his skill up 
to the maximum of his capaity, or who may 
attempt a day^s work with an outfit, tool or 
machine that is out of repair. 

These reflections willhelp the student to 
understand the relation between Man and 
Things in our economic system, between the 
capitalist and his capital, and, aside from 
any further consideration of the duty we 
owe property, which is made up of things, 
under our system of jurisprudence, should 
serve to emphasize the obligations and re- 
sponsibilities we all assume when we use 
tools and other conveniences necessary in 
the processes of producing and distributing 
the wealth upon which we must depend for 
sustenance, health, comfort and happiness. 



24 Fifty Lessons 07i Utilitarian Economics 



Responsibilities of Man 



Responsibilities of Man — Divided Between Owners, Man- 
agers and Workers in Industry — Rights and Duties of Each 
Group — What Workers and Owners Should Receive Out of 
Production — Difficult Neutral Positions of Managers — How 
Men Are Placed in Industry. 

Lesson No. 3 

Responsibilities in industry fall, primar- 
ily, upon three ^groups of men: Owners of 
plants. Managers of plants, and Workers 
in these plants. The plants furnish the 
capital and promote and establish the en- 
terprise; the managers plan and direct the 
details of operation, and the workers fit 
themselves into their proper places in the 
organization to perform the duties they are 
best fitted to perform. 

Any consideration of the responsibilities 
resting upon these three groups of persons 
would be incomplete without fair reference 
to the rights of each group. We know that 
rights, whether political or economic, im- 
pose responsibilities upon persons who claim 
and presume to exercise them. It is equally 
true that the assumption or imposition of 
responsibilities presuppose the existence of 



From the School of Utilitarian Economics 25 

whatever rights may be necessary to enable 
the person or persons properly to meet these 
responsibilities. 

Men and women who promote useful en- 
terprises and put their savings into these 
enterprises are entitled to a fair return on 
their investments. 

Managers who put their experience and 
talent into the successful operation of in- 
dustrial enterprises are also investors and 
are entitled to fair treatment and just re- 
muneration. 

Workers who help to energize these plants 
and to keep them going are entitled to fair 
pay, safe, clean working conditions and 
reasonable hours of service. 

Out of the earnings of the plant the own- 
ers must furnish sufficient capital to fairly 
pay the men, managers and workers, who 
keep the plant going; to keep the plant in 
fit condition for successful operation; and 
to take care of all other necessary obliga- 
tions, such as taxes, insurance and other 
overhead charges. In a word, the respon- 
sibility of the owners is to supply the cap- 
ital necessary to take care of the plant and 
keep it on the basis of a "going concern." 

The responsibility of the managers is to 
^lan and direct a way that will give the 
best possible results for the three groups of 



26 Fifty Lessons on Utilitarian Economics 

persons directly interested in the successful 
operation of the plant. They must place, 
group and direct workers with due regard 
for aptitude, talent, serviceableness and 
efficiency. Fit men must be picked for 
foremen and other responsible positions. 

Men must be placed in the plant where 
they can do best and most for the plant, best 
and most for themselves, for otherwise, the 
result will be unsatisfactory, and may be 
disastrous from the standpoint of a maxi- 
mum output, which is, after all, the great 
consideration in practically all of our basic 
industries. 

Properly the position of the manager of 
an industrial plant is neutral. He stands 
between the owners and the workers, and, 
in a very substantial utilitarian sense, is re- 
sponsible to both. It is the manager's duty 
— at times a rather difficult duty — ^to pro- 
tect and promote the interests of both the 
owners and the workers, for in no other way 
can he hope for a maximum of good in the 
management and general results of plant 
activities. 

When we come to deal with the respon- 
sibilities of workers in an industrial es- 
tablishment we encounter a more complex 
problem, for these responsibilities are large- 
ly personal and depend largely upon the 



From the School of Utilitarian Economics 27 

moral character of individuals. Owners 
look to the managers ; managers look to the 
superintendents, foremen, or other heads of 
departments ; but when we leave these heads 
we frequently have large groups of men to 
deal with, each man performing his work, 
more or less, in his own way. Practically 
the only test of the fitness and efficiency of 
many men and women in industry, and the 
only test of their faithfulness and loyalty, 
is to ,be found in the sum of what they do 
in a given working period. 

If the worker is lazy, or indifferent, or 
vicious, and inclined to loaf, or practice 
sabotage in any one of its many forms, he 
will have ample opportunity to do it, for in 
the very nature of his work, he will be 
alone most of the time during the workday. 

Thus, the question as to whether the 
average worker is to meet his responsibili- 
ties to the plant becomes altogether per- 
sonal, in the first instance, and must de- 
pend upon his conception of his moral obli- 
gations. It is a refreshing reflection that 
a large majority of our American workers 
usually have met these moral obligations in 
a way that has been highly creditable to 
them and profoundly beneficial to Amer- 
ican industry. Indeed very much !of our 
marvelous industrial progress in America 



28 Fifty Lessons on Utilitarian Economics 

is due to the fine moral character of Amer- 
ican workmen, and it ds a matter o'f su- 
preme consolation to the owners and man- 
agers of our big industrial establishments 
that the average American worker is com- 
paratively free from those hurtful inclina- 
tions and practices which have forced upon 
us some of our heaviest business losses and 
gravest economic problems. 

At the same time a large infusion of 
alien elements into our industrial population 
has forced upon many of our largest indus- 
trial establishments the very serious prob- 
lem of a lack of loyalty which grows out of 
the failure of workers to realize and fully 
meet their responsibilities in industry. The 
result is found in a lack of harmony be- 
tween plant groups, frequent friction, cost- 
ly ruptures, inefficiency, production much 
below the reasonable maximum, and a gen- 
erally unsatisfactory condition with respect 
to wages, hours of service, and commodity 
prices. 



From the School of Utilitarian Economics 29 



Man's Duty to Man 



Man's Duty to His Fellows — Fair Wages — Reasonable 
Hours of Service and Working Conditions — Goodfellowship 
As An Asset In Industry — Workers and Employers Should 
Be Considerate of Each Other's Interests — Old Idea of 
"Master and Servant Outlined — The Hurt of Class Preju- 
dices. 

Lesson No. 4 

Man's duty to man in industry is, for 
utilitarian purposes, not essentially differ- 
ent from man's duty to man in any other 
sphere of human activity. 

We hear much of a system of "wage slav- 
ery" in America. Yet a careful study of 
American industrial establishments fails to 
reveal facts of sufficient moment to sustain 
the claim that "wage slavery," or industrial 
slavery of any other kind, exists in this 
country. True, industrial abuses are not 
unknown in this country. But in the main 
American employers, in whatever field of 
endeavor, are fair, and considerate of their 
workers ; indeed, it would be an anomaly for 
them to be otherwise, for most of them have 
risen from the ranks of workers and have 
therefore a profound and abiding sympathy 
for persons who work for a living. 



30 Fifty Lessons on Utilitarian Economics 

The fact that American workmen are the 
best paid workmen in the world, and that 
organized workers in America have made 
greater progress toward the solution of la- 
bor problems than the workers of any other 
country, emphasizes, in an eloquent way, 
the degree of success the employers have 
achieved in efforts to meet and perform the 
duties they owe to men and women who 
work for them. 

What are the duties of employers to men 
and women who work for them? 

It is a human obligation. Wages should 
be fairly remunerative; hours of service 
should be reasonable, working conditions 
should be such as to protect the health, life 
and limb of workers; and, quite as import- 
ant as any of these things there should be 
at all times an attitude of genuine and sub- 
stantial friendship, evidenced by efforts to 
be considerate, kindly and respectful in all 
relationships that exist between employer 
and worker. 

Overbearing, inconsiderate employers do 
not get out of their men the best there is 
in them. 

Nor will overbearing, inconsiderate 
workers get out of employers the best there 
is in them. 



From the School of Utilitarian Economics 31 

Industry can have no better asset than 
good-fellowship. 

The human element in industry, as in 
politics and all other spheres of life, is the 
great need always, and the fact that we 
have more of this element in industry to- 
day than ever before in history promises 
much for the future of mankind. 

When we ceased to speak of master and 
servant^ and began to speak of employer and 
employee, it was an indication that we had 
passed into a new day for the world, and 
that the old order, with its castes, its class 
distinctions, and its galling inequalities, 
was passing away. 

True, we still have classes, and perhaps 
always will have them unless nature finds 
some way of leveling all human beings into 
a comimon mass, with every person the 
equal of every other in skill, in intellectual 
endowment, in capacity to do, and to think, 
and to achieve, and with no person having 
any desire, or taste, or ambition above or 
beyond that of his neighbor; but so long as 
we have these differences in capacity and 
in inclination, we will find society divided 
into classes, and rightly so. 

But that is no reason why we should have 
class prejudices, class struggles, class wars, 
for we have at least progressed far enough 



32 Fifty Lessons on Utilitarian Economics 

to know that while these natural inequali- 
ties exist and may continue to exist, we can 
yet approximate equality by keeping oppor- 
tunity open upon equal terms to all men of 
like talents and inclinations in a given 
group or class, and by scrupulously render- 
ing "unto Caesar the things that are 
Caesar's." 

How far we have traveled in the direction 
of a full realization of man's duty to man 
is indicated, not only by a large number of 
laws and administrative policies in the pub- 
lic service, but also by revolutionary 
changes in our industrial system, made as 
the result of better understanding between 
employers and employees. 

Man's duty to man is not yet fully real- 
ized and performed; but humanizing in- 
fluences now everywhere at work, in in- 
dustry and elsewhere, serve hopefully to 
reimind us that we are drawing ever closer, 
not only to a realization of this duty, but 
also to a performance of it. 




f int 

5cm 



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iriiiffnEcoifiofiiBcs 



This School is a Key to a Great Door; Knock 
and it will open to reveal many simple, practical, 
everyday economic truths that are now hidden, and 
make clear many things that are now in confusion 



LESSONS 
No. FIVE, SIX, SEVEN and EIGHT 



mm E,€@[fi0(fiii€i. 



826 Seaboard Bldg. 

SEATTLE, WASHINGTON 

Copyright 1921 



President and Faculty Director..F. Wesley Phelps 
Director of Studies /. Buckner Myrick 



From the School of Utilitarian Economics 33 



Man's Inhumanity to Man 



Man's Inhumanity to Man in Modern Economics — Ignor- 
ance of Economics to Blame — Failure to Understand Utili- 
tarian Values — Some Popular Errors — Right to Work for 
Living is Both Natural and Constitutional Right in America 
— Mistakes of Labor Organizations — Injuries to the Public. 

Lesson No. 5 

In spite of all of our refinements, our 
progressive laws and policies, our benevol- 
ences and our general enlightenment, our 
economic system is still burdened by many 
things that are alike unbecoming and 
brutal. 

Some men get too much, some too little 
out of the grind of the day. 

Wealth and the benefits of wealth are 
not always justly distributed. Some men 
are richer, some poorer than they deserve 
to be. 

But these inequalities are more or less 
ephemeral. Most men have come to un- 
derstand that material wealth is of little 
value except in its use. The wealthy man 
does not get more benefit or more pleasure 
out of the clothes he wears or the food he 
consumes than the poor man gets, and, 
very often, not so much. 



34 Fifty Lessons on Utilitarian Economics 

The mere fact that a man is worth sev- 
eral million dollars doesn't make him hap- 
pier than his fellows who depend upon the 
pay envelope for what they get out of life. 

Rich men are too far removed from their 
wealth to enjoy it. 

Some workers get more excitement and 
more pleasure out of a single payday than 
some of our mighty captains will get out 
of a whole year's dividends from a dozen 
different sources. 

The remote income, in itself, is unexcit- 
ing and more or less empty from the stand- 
point of personal enjoyment, and con- 
tributes to the happiness of its beneficiary 
only when he humors his passion for plan- 
ning new enterprises or enlarging old ones. 

The satisfaction and pleasure of payday 
for the average worker is immediate and 
direct and contributes very much more to- 
ward a full life than the remote income of 
the wealthy man. 

The injustice and inhumanity which have 
grown out of our failure to recognize such 
simple truths as these is appalling. All 
our bitter and often tragic industrial con- 
troversies and conflicts result from our 
failure to understand the true position of 
the man of wealth and the nature of his 
wealth. Rockefeller, Morgan, Armour, 



From the School of Utilitarian Economics 35 

Carnegie, all the great captains of the last 
quarter of a century, have been abused, 
ridiculed and held up to public scorn by 
thoughtless critics who seemed to think 
these men could wear more clothes, con- 
sume more food and live in more houses, all 
at one time, than the ordinary mortal, and 
that they, in some way, were wearing 
clothes, consuming food and living in 
houses that ought to belong to other people. 

The fundamental error underlying all 
this injustice and inhumanity is in the fail- 
ure to understand utilitarian values. Take 
the oil magnate ; Rockefeller, by cheapening 
oil and developing facilities for its dis- 
tribution, put light into more American 
homes than any other man of his time, not 
excepting Edison. Or take the great pack- 
er; Armour, and Armour methods, put 
meat and meat products within the reach 
of more families that had been without 
these things than any other single influence 
connected with the production and dis- 
tribution of meats. We are not unmindful 
of certain abuses which inevitably crept 
into both the oil and the packing industry; 
but our concern for the moment is the 
utilitarian value of services rendered in one 
case by a man who put light in even the 
humblest of American homes, and in the 



36 Fifty Lessons on Utilitarian Economics 

other by a man who put meat on the tables 
of even the lowest paid of our workers. 

There is more of good than harm, more 
to praise than to condemn, in the policies 
and plans of our great captains of indlus- 
try when we come carefully to weigh the 
utilitarian value of their colossal opera- 
tions. 

Rockefeller's kerosene lamp and Ar- 
mour's meat have been powerful votaries in 
American industry, American culture and 
American civilization, and we should not 
permit prejudice and passion to blind us to 
the profound economic significance of these 
facts. 

But all that is unjust and inhuman in 
the industrial life of America has not been 
lavished on men of great wealth. 

The poorest of the very poor have not 
been without more than their share of in- 
justice and inhumanity. 

The right to work for a living is a 
natural right, and in America at least, has 
received constitutional sanction in the in- 
alienable right to "life, liberty and the pur- 
suit of happiness" and in the freedom of 
contract. Yet men have been denied this 
right by organized workers. In too many 
pathetic instances they have been abused, 



From tfie l^chool of Utilitarian Economics 37 

clubbed, and sometimes killed when they 
sought to exercise it. In a long list of acts 
of violence committed either by members 
of labor organizations, or in the name of 
these organizations by sympathizers, noth- 
ing is to be found that is more shockingly 
inhuman than these repeated assaults upon 
citizens who, following the dictates of their 
own consciences and attending to their own 
problems in their own way, elect not to 
affiliate with labor organization. Nor has 
any single thing done more to discredit the 
great forward movement of labor than this 
intolerant and brutal attitude toward men 
who prefer an independent course of ac- 
tion in seeking employment. Moreover, be- 
cause of these coercive tactics an extreme- 
ly heavy per cent of the men who belong to 
labor unions owe their membership to fear 
rather than to devotion to the cause of 
Unionism, with the inevitable result that 
labor organizations generally are lacking 
in that solidarity of sentiment without 
which they can never hope to make the 
progress the workers are ambitious to 
make. 

Nor have these organizations always 
been as thoughtful of the general public as 
they might have been. It is not easy to 
estimate the suffering and loss of life, for 



38 Fifty Lessons on Utilitarian Economics 

instance, resulting from a strike of milk 
wagon drivers, or the men who deliver ice 
in a large city during the summer months. 
And who can contemplate, without shud- 
dering, the frightful consequences of a pro- 
longed coal strike, such as was threatened 
a little while ago, or a complete railroad 
tieup, such as we have had occasion to 
dread in the last few years? 

In these cases, and in many others, 
"man's inhumanity to man" would indeed 
"make countless thousands weep," and the 
hideousness of it all cannot be lessened by 
the rather stoical reflection that such in- 
humanity is merely a reply to inhumanity 
almost equally as revolting, in some in- 
stances, on the part of employers. 

All these things are utterly wicked, and 
what we are seeking to do is to point a bet- 
ter way which may easily be found if we 
will consider, as we should, the utilitarian 
aspect of everything having to do with our 
industrial relations. 



From, the School 0/ Utilitarian Economics 39 



Man's Duty to Self 



Man's Economic Duty to Self — Love of Work Means Ef- 
ficiency — How Man May Find Out Who and What He Is — 
''Know Thyself in Industry — Conscience as a Guide to Con- 
duct — Men Who Bo Their Best Succeed Best. 

Lesson No. 6 

No man can do his best unless he first 
finds out what he is best fitted to do ; and 
he will not do his best then unless he likes 
the thing he is doing. 

Duties that are irksome are not well per- 
formed. 

We do our best and finest work only 
when we love it. 

Men of genius in industry, as elsewhere, 
are men who are passionately devoted to 
what they do in the day's routine, and 
without devotion of this kind no man can 
ever climb very far above the dull average. 

"Know thyself," therefore, and do that 
thing you are best fitted to do. 

It is not always easy for a man to know 
himself. Frequently the real self is con- 
cealed by prejudices and predispositions; 
or it is buried beneath a mass of personal 
vanities, or glossed over and hidden by the 
flatteries of our friends. It is of interest 
to know that all the witnesses we might 



40 Fifty Lessons on Utilitarian Economics 

call in an effort to find out who and what 
we are, and what we are best qualified to 
do, are prejudiced witnesses, with perhaps 
one exception. Consciously or unconscious- 
ly, my own opinion of me is prejudiced. I 
am usually either more or less than I think 
I am. The opinion of my friends, as a rule, 
are rather too flattering. The opinion of 
my enemies are unfair, and often unjust to 
a hurtful extent. And persons not to be 
classed as either friends or enemies, while 
having no prejudices one way or the other, 
may be too indifferent, or too remote in 
what they know of us, to weigh accurately 
our talents and aptitudes. 

But in spite of these difficulties, it still 
is possible for a man to find out, approxi- 
mately, at least, who and what he is, and 
what particular thing he is best qualified 
to do. In any event the search for self is 
always interesting, always profitable, from 
a utilitarian standpoint, and the degree of 
success to be achieved in this search is a 
fair forerunner of the degree of success the 
usual man is to achieve in his life work. 

Man's duty to self in industry included 
the obligation to know himself; he must 
also know his fellows, their rights, their 
responsibilities, and must respect them; 
he must know and observe the ethical 



From the School of Utilitarian Economics 41 

standards of the useful game he is playing; 
he must use his head as well as his hands ; 
he must guard the interests of co-workers 
and employers just as he guards his own; 
must eschew envy, jealousy, bickering and 
bitterness of all kinds and hammering the 
line hard from his point of vantage. 

The man who thus puts his conscience 
into his work usually is the man who climbs 
highest and achieves most. 

Our industrial Titans are from the ranks 
of such as these. 

No man can ever hope to rise above the 
dead, prosaic level of mediocrity who fails 
to live up to these obligations to self. 

These rules of conduct apply with equal 
force to owners and managers. Owners 
and managers who permit favoritism, or 
the hope of some temporary financial ad- 
vantage, to tempt them into errors in the 
selection and placing of men who are to 
operate their plants, or who adopt and en- 
force unfair policies and practices in deal- 
ing with their workers, are foredoomed to 
failure, and for the fundamental reason 
that they are assuming a wholly false atti- 
tude toward their own interests, which is 
but another way of saying that they are 
not true to self. 

The rules here suggested in general 



42 Fijty Lessons on Utilitarian Economics 

terms would necessarily include, not only- 
all the relationships between owners, man- 
agers and workers, but would extend also 
to the tools used in the processes of produc- 
tion, machinery, plant equipment general- 
ly, materials and all physical properties 
connected with the plant and its operation. 

Owners and managers will not fully 
meet their obligations to themselves if they 
fail to provide workers with tools and ma- 
chinery that will enable them to work easily 
up to the maximum of their capacities. So, 
too, working conditions, shop environment, 
the general arrangement of the ports and 
departments of the plant, should all be such 
as to encourage a maximum of efficiency. 

On the other hand workers will not fully 
meet their obligations to themselves if they 
fail to perform in a way that will encour- 
age owners and managers in keeping the 
plant and its equipment and general ar- 
rangement up to a high standard of com- 
fort, convenience, serviceableness and ef- 
ficiency. 

All these and many kindred obligations 
inhering in the routine of the day, are du- 
ties men owe to themselves, and men, 
whether owners, managers or workers, will 
succeed or fail according to the observance 
or non-observance of these simple rules. 



From the School of Utilitarian Economics 43 



The Minimum Man 



Economic Status of Minimum Man Who Does His Least 
and Worst — All Inefficiency Not Intentional — Some Men 
Below Normal — Utilitarian Value of Minimum Man Difficult 
to State — Evil Consequences of High Wages and Low 
Output. 

Lesson No. 7 

The Minimum Man in industry is the 
man who does his least and worst instead 
of his most and his best. 

Not all the minimum men in industry 
are inefficient from choice. Many of them 
are naturally below normal in talent. Their 
minds are underdeveloped in many in- 
stances. They think slowly, muddily, or 
not at all. They use their hands and their 
senses clumsily, often to their own serious 
bodily hurt. Some of them might have be- 
come more efficient if they had fallen into 
the right grooves, or if they had been given 
earlier training in the work they have 
elected to do. 

But whether intentional or unintention- 
al, the inefficiency of Minimum Men is one 
of the heaviest taxes resting upon the mod- 
ern industrial system. 

There are other men in our industrial 



44 Fifty Lessons on Utilitarian Economics 

plants who purposefully and deliberately 
keep their efforts and capacities on a mini- 
mum basis. They want short hours and 
long pay. Their chief concern is, not the 
output of the plant, but the pay envelope. 
Frequently these men are much above the 
average in both general and special in- 
telligence. Given different dispositions, 
and assuming a different and juster atti- 
tude toward themselves and their employ- 
ers, many of these men, instead of remain- 
ing on low minimum levels in industry, 
could achieve marked success, and would 
become a benefit instead of a burden to the 
American industrial system. 

Considered from the standpoint of 
Utilitarian Economics, the Minimum Men 
in industry present one of the hardest and 
most vexing of our economic problems. The 
Minimum Man covers a wide range of per- 
sons in industry, extending from the un- 
trained or mentally deficient worker who is 
helplessly and hopelessly, but unintention- 
ally inefficient, all the way to the shrewd 
and capable radical propagandist whose de- 
liberate attacks upon efficiency in indus- 
try frequently assume the revolting aspect 
of criminal violence. These are slackers, 
saboters ; men who throw monkey-wrenches 
into costly machinery; cut shovels off to 



From the School of Utilitarian Economics 45 

make the lift lighter and resort to other 
practices to reduce the value of services 
they accept pay to perform. 

These men present a complex problem, 
one having quite as much to do with morals 
and politics as it has to do with economics. 
We shall not stop here to consider the evil 
consequences of this perverse attitude of 
the worker toward his obvious moral and 
legal obligations. We shall consider it only 
from the view point of Utilitarian econom- 
ics and in its relation to some of the larger 
problems that now vex and burden the la- 
bor movement and the employers of the 
country. 

Who makes up the deficiencies of the 
Minimum Man in industry? 

Men who deliberately attack production, 
or the agencies and instrumentalities of 
production, with a view of reducing the 
output, attack at the same time, not only 
the wage scale, but the general level of com- 
modity prices also; for as production is 
hammered down, wages also are hammered 
down, and commodity prices are hammered 
up. 

Thus these men inflict a double injury 
upon the workers. By curtailing produc- 
tion they force employers to curtail wages 
or reduce the market supply of the things 



46 Fifty Lessons on Utilitarian Economics 

they are engaged in producing, thus cre- 
ating a wholly arbitrary and artificial 
scarcity of these things in the market, and 
this, inevitably, results in an upward trend 
of prices. 

Production is the basis of all our eco- 
nomic relations. 

No factory, in normal times, can pay 
high wages on a low output without hazard- 
ing the dangers of bankruptcy. 

Nine-tenths of the deficiencies in wage 
scales are chargeable to the Minimum Men 
in industry; and nearly all of the quarrel- 
ing between employers and workers in this 
country may be traced finally to the same 
wicked source. 

The whole question of plant efficiency in 
America resolves itself finally into the 
problem of the Minimum Man, and if em- 
ployers and workers will, in good faith and 
with feelings of goodfellowship, address 
themselves studiously and seriously to this 
problem with a view of solving it in a way 
satisfactory to all persons and interests in- 
volved in it, they will soon rid American 
industry of many things that now bur- 
den it. 



From the School of Utilitarian Economics 47 



The Maximum Man 



The Maximum Man — Struggle Between Maximums and 
Minimums — Joh Must Fit Work — Misfits and Misplacements 
in Industry — Maximum Service and Maximum Wage — 
Definition of Maximum Man — The Menace of the "Half 
Man'' in Industry — The Great Goal in Industry. 

Lesson No. 8 

In industry, as in other spheres of ac- 
tivity, there is a steady, persistent strug- 
gle between Maximums and Minimums, — 
between men and groups of men who do 
their best and their most, and men and 
groups of men who do their worst and 
their least Go where we may or will, into 
whatever plant or business institution, 
and, if we are at all observant and critical, 
we will see evidences of this ceaseless con- 
flict between Maximums and Minimums. 

What the normal man craves most is a 
chance fully to express himself in what he 
does or says. 

The Maximum Man digs out of his own 
nature a Maximum of his own worth, and 
puts it into his work. The logical economic 
consequence is a maximum wage, steady 
advance toward higher personal levels, and, 



48 Fifty Lessons on Utilitarian Economics 

ultimately, a maximum of success, and a 
maximum of happiness. 

By an intelligent application of their 
skill, men sometimes achieve Maximum re- 
sults at a Minimum outlay of energy. 
These are thoughtful workers. On the oth- 
er hand, we frequently meet men who will 
expend a Maximum of energy to achieve 
Minimum results. Such men usually lack 
the skill and intelligence necessary to make 
them efficient. Not always are they lack- 
ing in either faithfulness or industry. More 
often it is a case of misplacement They 
are undertaking to do, not the thing they 
are best fitted to do, but, perhaps, the thing 
they are least fitted to do. 

The job must fit the man always if the 
man is to rise to the full maximum of his 
powers, his skill and his usefulness in the 
economy of life. 

The misfit in industry often is as much 
of a burden as the unfit. But a man who 
does not fit into one position may fit into 
another, and thus finally find the work he 
is best qualified to do. This problem of 
placing men according to their talents and 
aptitudes is alike vital and perplexing, and 
is the direct cause of much friction and 
much ill-feeling in industry. The blame, 
as a rule, cannot all be put upon either the 



From the School of Utilitarian Economics 49 

management or the worker. In most cases 
both are at fault; the worker, in the first 
place, because he has not the knowledge he 
ought to have of himself, his own skill, ap- 
titudes and inclinations, and the manage- 
ment, in the second place, for a lack of that 
quick insight and intimate discernment so 
necessary to the proper placing and group- 
ing of workmen according to their fitness. 

Most men of normal type wish to rise to 
the level of their maximum capacity. Even 
the hopelessly inefficient man frequently 
struggles to attain high standards of ef- 
ficiency that will cause him to be regarded 
by his fellows as a Maximum Man in his 
class. 

The Maximum Man is the man who does 
his best, in the best possible way, in the 
shortest possible time, and at the least pos- 
sible expense to himself and his employer. 

Not always, but usually the Maximum 
Man gets the Maximum wage. 

Of course all men are not endowed by na- 
ture with the intelligence and skill neces- 
sary to achieve maximum results in indus- 
try. 

We find in industry the same personal 
disparities and differences that we find in 
law, in medicine, or in any other sphere of 
human endeavor. Men in America are 



50 Fifty Lessons on Utilitarian Economics 

born equal only in the sense that our pub- 
lic policies extend to them equal rights and 
equal opportunities, insofar as the law can 
bestow these things. It is not possible for 
the law, or any other conceivable thing, to 
put all men upon the basis of absolute 
equality. The differences between men, dif- 
ferences in talent, taste, look, and outlook, 
are written by nature, and man cannot rub 
them out; and it is a good thing that it is 
so, for without these differences life would 
lose much of its charm. 

In a recent issue of a scientific publica- 
tion there appeared an article on "the men- 
ace of the half -man," the subject being ap- 
proached from a moral standpoint. 

In one American city seventy schools are 
maintained to accommodate pupils that are 
strikingly deficient in mind and in moral 
outlook. 

The "half-man'* is a menace and a prob- 
lem in economics, as well as in morals; in- 
deed, we sometimes think if we could work 
out some plan, or some policy, that would 
fill American industries and other Ameri- 
can business establishments with whole 
men, men of maximum intelligence and 
maximum efficiency in the group to Which 
they belong, most of the problems that now 



From the School of Utilitarian Economics 51 

vex us, moral, political and economic, will 
melt with thin air. 

The things and relationships we have 
been considering in our studies thus far 
will enable us to understand, not only the 
impossibility also of the shallow notion that 
any human being in organized human so- 
ciety anywhere can now morally lay claim 
to the full and undivided value of all he 
produces with his labor, whether he does it 
with his hands or his brain. 

It is just as impossible, as indefensible 
and as immoral for a man in industry to 
claim the full value of all he produces as 
it would have been for Mozart or Wagner 
to have claimed the full value of the mar- 
velous music they wrote, or for Edison to 
claim the^full value of all of his remarkable 
inventions. Edison, like our great compos- 
ers, and like our great captains in business, 
is sharing the fruits of his talent and his 
labor with mankind, and when we squeeze 
our problems in economics down to final 
terms, we will find that all men must do 
likewise. 

What we have said in the series of stud- 
ies about man and his relation to persons 
and things, his responsibilities and his du- 
ties, whether worker or employer, whether 
he labors with his muscles or his mind, and 



52 Fifty Lessons on Utilitarian Economics 

whether we have considered the minimum 
man or the maximum man, has been said 
with the hope of stressing our intimate 
personal and collective involvements, and 
the vital and mutual obligations which 
spring naturally from these involvements. 
We are here among our neighbors. Some 
of us are strong, some are weak ; some are 
capable, some incapable ; some helpful, some 
helpless; and whatever the blessing and the 
burden of it all, the obligations imposed are' 
mutual obligations and we cannot shirk 
them without doing violence to self, to so- 
ciety, and to the best teachings of our 
civilization. 

No man is independent. No man who is 
mentally and morally sound wishes to be 
independent. 

Progress in human society is toward de- 
pendence. 

By dependence we do not mean helpless- 
ness, laziness, indifference, or a lack of 
pride in personal prowess and personal su- 
periority and achievement. We mean sim- 
ply a recognition of intimate interlace- 
ments, the mutuality of our interests, and 
that fine accord which enables each of us 
to carry our part of the common load of the 
world's work. 

Not all of us can attain the high levels 



From the School of Utilitarian Economics 53 

of the mighty men of genius ; but when we 
have given full and adequate play to our 
talents, doing our best each day, and in ev- 
ery set of circumstances ; accepting the chal- 
lenges of each day with resolute and cheer- 
ful courage, and putting heart and consci- 
ence into the thing we do, we will at least 
attain maximum levels in our spheres of 
activity, and may step into the class of the 
Maximum Man we have been considering. 



LESSONS 
No. NINE, TEN, ELEVEN, 

TWELVE, THIRTEEN and 
FOURTEEN 



Copyright 1921 



From the School of Utilitarian Economics 55 

Introduction to the Study of the Senses 

and Their Utilitarian Value 



The discussion of the economic function 
and importance of the animal senses^ Sight, 
Hearing, the Sense of Smell, Taste, and 
the Sense of Touch, is, we believe, unique; 
yet such a discussion obviously is a fit in- 
troduction to a study of Tools, the second 
grand division of our studies in Utilitarian 
Economics. 

In considering the vast and varied uses 
to which we put our senses in modern in- 
dustrial life, and, indeed, in all useful 
spheres of human activity, it is interesting 
to note that man is the only animal, so far 
as we are permitted to know, that has been 
able, with the aid of mechanical devices, 
to greatly extend the range of his natural 
senses. This fact alone, without any con- 
sideration of the uses to which we put the 
unaided senses, is sufficient to make the 
animal senses of profound economic im- 
portance; and it really is amazing that 
economists have not hitherto given these 
tremendous factors in our economic develop- 
ment a large place in their studies. 

No study of economics, it seems to us, is 



56 Fifty Lessons on Utilitarian Economics 

complete unless it gives a big and im- 
portant place in the history of our economic 
unfoldment to the normal animal senses 
without which the progress we have made 
would have been impossible. 

These senses, finally, form the broad and 
enduring base upon which we have rested 
all that we have, all that we know, and all 
that we have achieved in our toiling up 
through the sweat and muck of the cen- 
turies. 

A brief suggestive study of these senses, 
as a kind of prelude to a study of Tools, the 
mechanical aids they have called to the as- 
sistance of mankind, may, therefore, help 
us to a better understanding of the utili- 
tarian philosophy we are seeking to em- 
phasize in this series of lessons. 

Utilitarian values^ a phrase frequently 
found in these studies, should be under- 
stood by students who wish fully to grasp 
the meaning of what we are trying to teach 
in economics. 

Utilitarian values are not merely useful 
values y'thej are also useful values in right- 
ful use, 

A fine mind, unusual skill as a mechanic, 
genius in art or statecraft, nobility of char- 
acter, exceptionally keen senses, great phys- 
ical prowess, — these and many other hu- 



From the School of Utilitarian Economics 57 

man attributes represent "possible utili' 
tarian values, A fine mind unused or put 
to base uses; unusual skill as a mechanic 
misused, abused or neglected; genius in art 
or statecraft perverted to attain ignoble 
aims; nobility of character failing to ex- 
press itself in worthy deeds; exceptionally 
keen senses impaired by sluggishness of 
habit, dissipation, disuse or misuse; great 
physical prowess wasted in idleness or oth- 
erwise abused, — obviously in all these cases 
we fail utterly to find anything to express 
our conception of utilitarian values. 

We realize utilitarian values only when 
we translate these splendid human attrib- 
utes into useful action. 

Everything, every talent, every marked 
aptitude, every force latent in human char- 
acter has a possible utilitarian value; but 
unless these are put to good uses, unless 
they are translated into useful action, ac- 
tion that will bestow some benefit upon per- 
sons within their sphere of operation, we 
cannot regard them as realized utilitarian 
values. 

It is not enough merely to use sl talent, a 
tool, or a power. We must use it rightly, 
and for right purposes, and thus achieve 
results that are approximately right, mor- 



58 Fifty Lessons on Utilitarian Economics 

ally and otherwise, before we attain utili' 
tarian standards. 

Bentham was slightly wrong in assum- 
ing that the useful is also the beautiful. 

The useful is the beautiful only when the 
useful expresses itself in worthy, helpful 
action. 

Broadly things have two uses : A Right 
Use, and a Wrong Use. Take a knife, for 
instance : In the hands of a skilled surgeon 
it may be used to save a highly useful and 
noble life and thus add greatly to the gen- 
eral well-being and happiness of mankind. 
We here realize the utilitarian value not 
only of the knife, but of the surgeon's skill 
also. But suppose we put the same knife 
into the hands of an assassin and he uses 
it for murderous purposes. Here we find 
the Wrong Use of a highly useful tool, and 
what we reap surely is not utilitarian 
value. It is a destructive value, the direct 
antithesis of utilitarian value. 

The same is true of all mechanical tools. 

It is true of the animal senses also ; true 
of the uses or misuses to which we put our 
Eyes, our Ears, our Nose, and the other 
senses with which we are blessed, and it is 
equally true of all other human attributes. 

The utilitarian value of the human hand 
is not in the hand merely, but in the good 



From the School of Utilitarian Economics 59 

service the hand renders; and therein lies 
the beauty of the hand also, for if we use 
the hand for unworthy purposes, such as 
stealing, for instance, surely there is no 
beauty in it and therefore no utilitarian 
value. 

Great ideas, great thoughts, great senti- 
ments have utilitarian values only when 
they loosen useful energies and thus afford 
us an opportunity to call our animal senses 
to the line of action in the routine of the 
world's work. 



60 Fifty Lessons on Utilitarian ilconomics 



Natural Weapons 



Use of Tools in Economics — Natural Weapons as Dis- 
tinguished from Artificial or Mechanical Devices — Origin of 
Some Things We Use — Hands and Legs — Legal Recognition 
of Old Utilitarian Values — Workers and Employers Chiard 
Industrial Insurance — The Extension of Man's Senses hy 
Artificial Aids. 

Lesson No. 9 

Tools are the weapons with which man 
attacks the raw materials or the raw forces 
of nature. 

It is interesting, and it may be helpful 
to note that our English word weapon is 
allied to the Anglo-Saxon word woepman, 
meaning a full grown man ; and that it also 
may justly claim kinship with the Scandi- 
navian word wapentake, meaning a district, 
or a political division. In the Icelandic 
language we find the word Vapnatake, 
which means a weapon-touching, — ^^an old 
way of taking a vote, for districts were 
governed by men whose authority to gov- 
ern was confirmed by a touching of weap- 
ons. 

Our word tools comes more directly from 
work, and is related to a number of words 
descriptive of early industrial activities. 



From the School of Utilitarian Economics 61 

But we are now concerned with natural 
weapons, the things with which nature pro- 
vided us before we had entered upon the 
business of making the vast number of 
things we now call to our aid in industry 
and in other walks of life. Of course we 
still use these natural weapons, — legs, 
hands, eyes, ears, nose, taste, feeling, — but 
all of them we have supplemented and 
amplified by all kinds of mechanical and 
other artificial aids that enable us to do 
more in a given time than we could do in 
the natural state. 

We could not travel far in these times if 
we were forced to rely solely upon our legs 
for transportation ; yet our legs carried us 
through many centuries of time before we 
had arrived even at the age of crude boats. 

In primordial times we made a cup of 
our hand and drank water out of it; it was 
also the plate from which we ate our un- 
cooked food, and served us, too, as knife 
and fork. The hand also answered many 
other purposes in that dim and distant time 
before we had progressed far enough in the 
arts of peace to surround ourselves with 
the conveniences that are now within the 
reach of even the humblest of our kind. 

What an enormous family of things, — 
cups, saucers, plates, bowls, jars, pots, 



62 Fifty Lessons on Utilitarian Economics 

pans, spoons, knives, forks, all kinds of con- 
venient containers, and many of the point- 
ed and sharp edged tools, — we can trace 
back to the human hand! But how odd, 
how inconvenient it would be now if we 
were compelled to put our hands to all these 
primitive uses ! True, we must still depend 
upon the hand, in part, at least, even for 
the things we have substituted for the hand 
in the daily routine of life. The hand must 
still play its part in the smallest as well as 
the greatest of our undertakings. This fact 
is recognized in our jurisprudence now in a 
very definite and very substantial way, for 
under industrial insurance laws now on our 
law books, the man in a hazardous calling 
in industry who loses a major hand can 
collect from the state as much as $1,500.00 
for the loss he had sustained. So, too, the 
law puts a definite value on the eyes, ears, 
arms, legs, according to the usefulness of 
these natural weapons in industry, and if 
they are lost, or only injured, the person 
suffering the damage is compensated ac- 
cording to a rule prescribed by law. 

This legal recognition of the value of 
man's natural weapons, while comparative- 
ly recent, marks a far forward step in 
utilitarian economics, for utilitarianism is 
the fundamental basis upon which we have 



From the School of Utilitarian Economics 63 

rested these progressive and humane meas- 
ures. Employers and employees alike pay 
ungrudgingly into the state's industrial in- 
surance fund, for they have been quick to 
see the enormous and growing advantage 
of the policy. Accidents have decreased un- 
der this method of compensating injured 
workmen, and for obvious reasons. Both 
employer and worker are anxious to protect 
the fund they are taxed to maintain; em- 
ployers are more careful about the condi- 
tions under which men are required to per- 
form hazarous duties, using, whenever pos- 
sible, the best approved safety appliances; 
and the workers, as a rule, perform their 
duties more thoughtfully and with less of 
that reckless unconcern which once charac- 
terized workers of this type. The general 
benefit is found in the fact that our court 
calendars are no longer cluttered with suits 
for damages growing out of industrial acci- 
dents, and the shyster lawyer and "ambu- 
lance chaser,'' who once plundered worker 
and employer with equal conscienceless in 
these cases, has been forced to find other 
fields for his talents. 

We find, too, in pursuing these studies in 
utilitarian economics, that American em- 
ployers, as a class, have introduced many 
innovations in industry with a view of pro- 



64 Fi^y Lessons on Utilitarian Economics 

tecting their workers against any impair- 
ment of their faculties and a consequent 
lowering of their capabilities. Health is as 
scrupulously guarded as life and limb ; the 
air must be right for the lungs, the volume 
of light right for the eyes ; the hearing must 
be protected against possible impairment 
by harsh, continuous noises, as in telephone 
exchanges, and thus, all the senses which lie 
at the basis of man's original equipment 
for grappling with his industrial needs, are 
now considered as prime individual and col- 
lective assets and are shielded against in- 
fluences that tend to undermine them with 
a solicitude that is at once helpful and in- 
spiring. 

In subsequent lessons dealing with nat- 
ural weapons we shall see how helpless we 
would be in industry, no less than in the 
arts and sciences, and how much of con- 
venience, of comfort, of pleasure and of 
beauty we would have missed, if our f arsee- 
ing forbears had not opened the way for an 
extension and an amplification of the uses 
to which we put these natural weapons. It 
is an interesting reflection, and one which 
stirs our human pride, that, among all the 
things in the scale of animal life, man is 
the only animal that has been able, by 
wholly artificial means, to extend the range 



From the School of Utilitarian Economics 65 

of his senses. These extensions in the mat- 
ter of vision, of hearing, and of feeling, 
constitute amazing developments in human 
history, and, from a utilitarian point of 
view, it would be difficult to find any other 
developments that have been more pro- 
foundly beneficial to the human family. 
Indeed, if we should sponge the slate of all 
other obligations when we came to consid- 
er what return we should make for the 
blessings we have inherited from the toilers 
of Yesterday, we Vv^ould still find that we 
owe much more than we can ever hope to 
pay to the men who have extended the 
range of our vision, of our hearing, and of 
our sense of feeling until we can search and 
understand regions of space so remote from 
us that we can scarcely compute the dist- 
ances. 



Fifty Lessons on UtiUtarian Economics 



The Eye 



Economic Value of the Human Eye — Legally Recognized 
in Industrial Insurance Acts — Uses to Which We Put the 
Eye — The Naked Eye and Its Aids — Glasses that Help Us 
to See the Biggest and Smallest of Things — Benefits Derived 
From Yesterday. 

Lesson No. 10 

The economic value of the human eye 
is so vast and so varied, the uses to which 
we put the eye in our daily routine are 
so numerous, and, in many instances, so 
indispensible, it is not an easy matter 
either to define its position or to describe 
its function. Indeed the contributions of 
the human eye to civilization, even when 
we consider them from a cold economic 
point of view, are obviously so great in 
number and importance that we cannot do 
more than suggest them by naming only, 
a few of them. 

We pass over the uses to which we put 
the eye in academic education ; in the mas- 
tery of languages, in learning the use and 
meaning of words; in reading pleasurable 
and profitable books; in the perusal of our 
daily papers and our favorite magazines; 
in the contemplation of classics on canvas, 



From the School of Utilitarian Economics 67 

in stone and in the five lines of buildings 
that stand out as imposing specimens of 
architecture in various parts of the world ; 
yet these things, too, are a necessary part 
of our economic studies, for they have been 
factors of profound moment in economic 
evolution, and have made many notable and 
necessary contributions to our vast stock 
of utilitarian values. As a fact without 
these things we would still be in the shadow 
that glooms the jungle and the cave, but 
little removed from the ideals and practices 
of higher forms of apes. 

The economic value of the eye is now 
legally defined in all of our industrial in- 
surance laws, though this value is too low 
to give any fair idea of the important part 
the eye plays in modern industrial life. 
But the value the law puts upon the human 
eye in the event of its loss in hazardous 
work is necessarily arbitrary and is gov- 
erned to some extent by the rule of averages 
applicable to a given industrial group. Be- 
sides it necessarily takes into consideration 
only the value in use of the naked, unaided 
eye. The test in fixing the value of an eye 
is not in what it may be worth to the per- 
son who loses it, but what it is worth to 
society as a whole; and in applying this 
test it manifestly would be absurd to add 



68 Fifty Lessons on Utilitarian Economics 

the value of those useful and indispensable 
aids science and invention have provided 
to enable us to meet the demands of modern 
industrial life. 

This consideration again brings us face 
to face with the big debt we owe for what 
other men and women, in other days, have 
provided for our use and benefit. Without 
glasses to aid us in the processes of visual- 
ization, and to extend the range and ampli- 
fy the accuracy of vision, many millions of 
human beings would be unable to follow 
their favorite pursuits and do the work 
they are best fitted to do. 

With the naked eye at its best we cannot 
see very far. But when we call to the eye 
the aids now within reach of all classes of 
persons, there is, for practical purposes, no 
limit to our visioned range. We have pro- 
jected our vision into the blind recesses of 
space to uncover worlds so remote from our 
own that we can scarcely think of the dis- 
tance. The telescope has enabled us to meas- 
ure distances and sizes so great we can 
scarcely compute them. The Xray enables 
us to see through solid substances. With the 
microscope we can see things so utterly 
small that we regard them as no longer 
divisible. 

It would be dogmatic to say we would 



From the School of Utilitarian Economics 69 

have made no progress without these aids 
to the human eye ; yet without the telescope 
we would have been without much informa- 
tion of high economic value; without the 
microscope, the science of chemistry, which 
has played such a big part in our industrial 
and general development, would still be in 
its infancy ; and we would know much less, 
too, of the nature, origin and general char- 
acteristics of the diseases that afflict hu- 
manity. 

The ordinary economic uses to which we 
put the unaided eye in the routine of the 
day are too familiar to need emphasis; the 
locomotive engineer looking steadily at the 
track before him as it rolls under his en- 
gine; the lighthouse watchman scanning 
the sea for ships and storms; the lookout 
searching for whales from the crow's nest; 
—in a few words, millions of human eyes 
everywhere gazing upon things and forces, 
men and machines, toiling and whirring 
usefully in the mesh of our varied and 
beautiful economic fabric! 



70 Fifty Lessons on Utilitarian Economics 



The Nose 



Practical Use and Value of the Sense of Smell — Neglect 
of the Nose — Common View of Its Functions — Even Econ- 
omists Ignore It — Some of the Economic Uses of the Sense 
of Smell — Telling Quality of Cloth or Foodstuffs "by the 
Odor. 

Lesson No. 11 

We come now to consider a sense of 
high economic and scientific value, but one 
strangely neglected in spite of its constant 
use. Economists have not considered the 
nose a factor in our economic development. 
Even our medical scientists have neglected 
the unsurpassed utilitarian value of this 
animal sense. Indeed the common view of 
the sense of smell among practically all 
classes of persons is that it is limited to 
two functions: One has to do with things 
and conditions that are unpleasant and un- 
wholesome, and the other with things and 
conditions that are pleasant and wholesome. 
Certainly this sense would be highly useful 
if it answered no other purpose in animal 
economy, for it would mean something con- 
stantly to warn us against the dangers to 
health that where in unwholesome physical 
conditions, decaying animal and vegetable 



From Vie School of Utilitarian Economics 71 

life, stale and stagnant air, poisonous 
gases, miasmatic exudations, and many 
other things of like character. So, too, 
the pleasureableness of sweet and spicy 
odors would answer a useful purpose in 
life. But the sense of smell has still other 
practical uses in the economy of human 
society. 

The fabric expert rubs a piece of cloth 
between his hands and holds it to his nose. 
Cloth is made out of vegetable fibre, such 
as cotton or flax, or out of animal hair, 
such as the wool of sheep, or out of a mix- 
ture of these. Our fabric expert uses his 
sense of smell to find out, not only whether 
the odor of the sheep is in the cloth, but 
also approximately how much of it is wool 
and how much of it is cotton. By rubbing 
it violently between his hands he develops 
certain latent qualities inherring in the tex- 
ture of the material that enable him to 
find out what he wishes to know. The de- 
gree of his success depends upon the keen- 
ness of his sense of smell and the accuracy 
with which it can mark the difference be- 
tween the odor of threads made of cotton 
and threads made of sheep's wool. Odors 
are as distinct as colors or forms, and we 
could as readily recognize and classify them 



72 Fifty Lessons on Utilitarian Economics 

if we had not neglected one of the most use- 
ful of animal senses. 

Druggists know chemicals and medi- 
cines by their odors. 

Diseases have distinct odors; and some 
diseases are readily identified by the sense 
of smell. 

Flour experts know the difference be- 
tween good flour and bad flour by the odor 
of it. Most any of us can tell good from 
bad meat, good from rancid butter, or old 
from fresh fish. The wine and liquor ex- 
perts of France and America, indeed the 
^Vine tasters'' of all countries, have de- 
pended quite as much on the sense of smell 
as on the sense of taste in determining the 
age and quality of intoxicants. The same 
may be said of tobacco experts, sugar and 
syrup experts, coffee and tea experts, and 
a long line of experts in our commercial 
and industrial life who deal with products 
that result from blending processes, that is, 
products made from different grades or 
qualities of the same article, or from a mix- 
ture of different articles, such as cloth made 
of wool and cotton, or of cotton and silk. 

Despite its shortcomings, due to impair- 
ments for which we are responsible, the 
nose is still of vast economic usefulness to 
us, though not many of us ever stop to 
think of it. 



From the School of Utilitarian Economics 73 



The Ear 



Part the Ear Plays in Economic Life — Long Distance 
Listening — How the Telegraph, Telephone and Wireless 
Have Extended Range of Hearing Around the World — The 
Ear in Business — Laio Recognized Its Value. 

Lesson No. 12 

In the two preceding studies we found 
that we had vastly extended the range and 
utilitarian value of the human eye, but that 
we had perhaps, through neglect, failed to 
realize fully the economic usefulness of the 
nose. 

In considering the human ear, and its 
place and value in modern economics, we 
will find another remarkable collection of 
artificial aids that we have called into play 
to extend the range and value of this use- 
ful sense. If we have amplified and ex- 
tended the range of human vision until we 
can see stars in space so remote from us 
that we can scarcely calculate the distance, 
we have also extended the range of our 
hearing until we can hear around the 
world. The telegraph, the telephone, the 
cable and the wireless have wiped out dis- 
tances in all enlightened parts of the world. 
Any part of the civilized world can now 



74 Fifty Lessons on Utilitarian Economics 

make itself heard in any other civilized 
part, and in such a short period of time, 
too, that we have almost eliminated time, 
just as we have eliminated distance, in our 
world relationships. 

But we have a deeper concern in the 
closer and more practical everyday uses to 
which we put the sense of hearing. Our 
ears, like our eyes and our sense of smell, 
are in such constant use that we are at 
times quite unmindful of their great utili- 
tarian value. We are constantly receiving 
useful business and professional informa- 
tion of the most intimate and vital concern 
to us ; or we are listening to new and allur- 
ing business proposals; or receiving im- 
portant instructions in regard to the day's 
business or tomorrow's plans, or taking 
orders for something we have to sell, or 
absorbing some bit of useful knowledge 
passed on to us by a friend. 

So, too, our ears enable us to distinguish 
the ring of one metal from the ring of an- 
other, one voice from another voice, or good 
music from bad, a fact of very great im- 
portance since the advent of mechanical 
music, such as we have in the playerpiano 
and the phonograph, for here a good ear is 
of prime importance in passing upon the 



From the School of Utilitarian Economics 75 

tone, registry and general merit of rec- 
ords. 

In some of our mechanics the sense of 
hearing is so highly developed that the least 
jar in the sound of the machinery under 
their control will be detected and they are 
thus frequently able to prevent accidents 
of a very serious nature. Others who, per- 
force or otherwise, have permitted the 
sense to suffer impairment, are often less 
fortunate and close their records with a 
frightful disaster. 

The sense of hearing is also valued in 
our industrial insurance laws, and com- 
pensation is provided in case of its loss or 
partial impairment in hazardous occupa- 
tions. This compensation, as in the case of 
the eye, is reckoned on the basis of the loss, 
not to the individual, but to society as a 
whole. 



76 Fifty Lessons on Utilitarian Economics 



The Sense of Taste 



Sense of Taste as a Factor in Modern Life — Creates De- 
mand — Helps to Regulate Production and Fix Price Levels 
— Overlooked By Older Economists — Taste as Criterion in 
Market-place — How Expert Buyers Use Sense of Taste. 

Lesson No. 13 

If we may mix a little poetry in with our 
philosophy as we go along in this study of 
utilitarian economics, and thus make plain- 
er some of the things we are seeking to im- 
press upon the student's mind, it may help 
us to a fuller and completer understanding 
of natural weapons^ the natural tools with 
which we have been blessed and upon 
which we must so largely depend, not only 
for subsistence, but for our pleasures and 
luxuries also. Thus we depend upon the eye 
to mark out for us the delicate graduations 
of color, the tint and radiance of a beauti- 
ful natural environment; we depend upon 
the nose for the honied perfumeries that 
sweep up from the meadow and the flower 
garden; we depend upon the ear for the 
silvery cadences of our wooded areas and 
the fine tonal Mendings our musicians have 
fashioned for us, and upon taste, in an 
equally poetic and practical sense, for the 



From the School of Utilitarian Economics 77 

exquisite flavor of things — the flavor of 
foods and fruits, of drinks and confections 
and a long list of things that minister to 
our comfort and wellbeing. 

Here again the older school of economists 
have failed to take into the reckoning a 
prime factor in our economic life. 

Normally demand for a given article does 
two things ; ( 1 ) It is a factor in fixing the 
price at which the article sells in the mar- 
ket; (2) It is a factor in speeding up the 
energies involved in the production of the 
article. 

Demand depends largely upon taste. 
Taste thus becomes a factor in determining 
price levels and in production also. 

If the taste of the large number of con- 
sumers is for mutton rather than pork, the 
normal tendency will be toward higher 
mutton production. The use of the phrase 
normal tendency is deliberate; for if the 
production of mutton is too rapid, and out 
of proportion to the normal demand, the 
market may become overstocked and prices 
may decline. Or if prices are increased too 
rapidly, the demand may slacken, and 
again the trend of prices would be down- 
ward, though production may remain ap- 
proximately normal. In these abnormal 
situations, the law of taste is not working 



78 Fifty Lessons on Utilitarian Economics 

freely. Artificial barriers are intervening 
to prevent it from playing its normal part 
as a factor in determining prices and in 
influencing production. 

But taste has other vital economic uses. 
Foods, fruits, confections and other edibles 
are rated as good or bad, generally speak- 
ing, according to the appeal they make to 
the sense of taste. When we say we like 
the flavor of a certain brand of ham or 
bacon, or coffee or tea, or any other prod- 
uct, all we mean is that it pleases our taste. 
Taste thus becomes a criterion in the mar- 
ket-place. The merchant who can find out 
what articles are most favored by the pub- 
lic taste, and who seeks to supply this de- 
mand at the most reasonable prices, is in 
a fair way to make a success of his busi- 
ness. 

Many men in the business world, particu- 
larly buyers of foods, drinks, and other 
things of common consumption, have de- 
veloped the sense of taste up to a maximum 
of usefulness. They taste before they buy, 
taste the cheese or butter, the tea or coffee, 
the sugar or syrup, and by this process de- 
termine the quality and grade of the prod- 
uct. Sometimes the eye and the sense of 
smell can help in these grading processes; 
but in very many instances the sense of 



From the School of Utilitarian Economics 79 

taste is the sole reliance, and hence taste 
becomes an attribute of the first importance 
in modern business life and an economic 
factor of supreme rank when we consider 
utilitarian values and utilitarian stand- 
ards. 



80 Fifty Lessons on Utilitarian Economics 



The Sense of Touch 



Functions of the Sense of Touch — How it is Used in Trade 
— Example of Cotton Classers and Other Textile Experts — 
Grading Finely Ground Grains hy Touch — Devices to Regis- 
ter Temperature and Measure Wind Velocity Suggested dy 
Sense of Touch. 

Lesson No. I4 

Whether we know anything about it or 
not, we always feel of a piece of cloth when 
we go to buy it. Our fingers may not tell 
us anything that is reliable or conclusive 
about the texture and quality of the goods; 
but there are many men and women in the 
world who can appeal to this same sense 
with absolute confidence. 

Not only do they know wool, cotton, silk 
or linen in their pure, unmixed state, but 
they can tell by feeling of cloth that is a 
mixture of these, not only how much wool 
or cotton or silk or flax they contain, but 
also in what manner the threads have been 
put together. In a word the sense of touch 
instantly will tell them all they wish to 
know about the grade and quality of the 
cloth. 

The sense of touch is so highly developed 
among cotton classers in the Southern 



From the School of Utilitarian Economics 81 

states that some of them could almost grade 
and classify a bale of cotton in the dark. 

Many articles of food also are graded by 
the sense of touch. Some graders of flour, 
for instance, or meal, or sugar and other 
finely ground materials, rely quite as much, 
if not more, upon the sense of touch than 
upon either the sense of sight, the sense of 
smell or the sense of taste, though, as a 
usual thing, all these senses are brought 
into play by our expert graders. 

Many blind persons can tell the more 
pronounced colors through the sense of 
touch. The high state of development of 
this sense in persons who are blind is a 
matter of common note. Moreover, Helen 
Keller, and Senator Gore, the blind states- 
man from Oklahoma, have made us familiar 
with the remarkable success and distinction 
persons may achieve when their main and 
sometimes sole reliance, so far as the hu- 
man senses are concerned, is the sense of 
touch, and its close ally, the sense of taste. 

Here, too, we find another of the very 
useful senses that human beings, as a rule, 
have neglected. While the sense of touch 
still has many valuable economic users it 
yet is not as useful as it should be in our 
common everyday affairs. 

Allied to the human sense of touch, and 



82 Fifty Lessons on Utilitarian Economics 

no doubt suggested by it, are a large num- 
ber of things of great economic value. The 
thermometer and other devices we use to 
register temperatures, the direction and 
velocity of the wind, barometric pressure 
and other atmospheric conditions, all of 
them of high value in modern economic 
life, are among these now indispensable 
devices. 

The list of mechanical contrivances of a 
highly sensitive character, all of them bear- 
ing some relation to the human sense of 
touch, is a very long one. 

Only recently the scientific world was in- 
terested by the announcement of experi- 
ments with a new device that would regis- 
ter the human emotions, and while there 
may now be some question as to the prac- 
tical and utilitarian value of such a device, 
the mere possibility of an instrument so 
sensitive as to record the rise and fall of 
the various human emotions is of profound 
scientific interest. 



From the School of Utilitarian Economics 83 

These studies of the five senses have indicated, in some 
measure, the nature and importance of the series of lessons 
to follow, for in these lessons we will consider the mechan- 
ical aids our senses have helped us to create in order to 
amplify and increase other natural agencies of great and 
indispensable use to us in our economic life. 

What we have 'been able to do as the result of an ex- 
tension and amplification of some of our animal senses, 
notably vision and hearing, cannot be completely understood 
until we have given some consideration to the mechanical 
aids these senses have enabled us to call to our assistance 
in industry, in commerce, in science and in all the useful 
spheres of modern activity. 

We shall not say or assume that if we had been blind 
and deaf none of the many wonderful mechanical devices 
now in constant use would have remained unknown; but we 
can say with confidence that sight and hearing have been 
of enormous help to us in developing the wonderful things 
we now use in the routine of the world's business. 

What has happened as the result of mechanical crea- 
tions made possible by the use and extension of the animal 
senses is one of the most interesting things in economic 
history. 

We have many times multiplied all of our poivers. 

We have made it possible for one man to do the loork 
of many men. 

Take printers as an example: One printer operating a 
linotype will set as much type in a given time as five 
printers of the old school could pick out of the cases. It is 
not because he is a better or a more efficient printer. The 
difference in favor of the printer of today who operates a 
linotype is due to the machine, or the tool, if you please, 
icith which he works. But it is error to assume that the 
printer of today should receive five times as much pay be- 
cause he turns out five times as much type as the old printer 
turned out, thus doing work it once required five men to do. 
In the first place he does no more actual work than the 
printer who picked the type out of the cases. Besides the 
machine which enables the linotype operator to do the 
work it once required five men to do was produced by the 
labor of other men; these men have made it possible for 
the printer to set as much type as five men in the old way, 
and they have absorbed, in wages, approximately what the 



84 Fifty Lessons on Utilitarian Economics 

four missing and now unnecessary printers would have 
absorbed if we still used the slow process of picking type 
out of the cases. 

Or take another example: Many of us remember the 
lamplighter in towns and cities who, just before sunset, 
used to go around with ladder and torch, or matches, to 
light the oil lamps of the community. The larger the comr 
munity the more lamplighters it required to light the city 
for the night. 

Now one man, or only a few men at most, can pull a 
switch and light, in an instant, the largest of our American 
cities. 

Where it once required many men and much time to 
light our cities, one man or only a few men can do the work 
in less time than it takes to tell about it. 

This multiplication of our man-power, while considered 
in a general way by economists^ and recognized by every- 
body, nevertheless presents a neglected subject in econom- 
ics. 80 far as we have been able to find there is no statis- 
tical data available to show to what extent man-power has 
been multiplied in our various industries. 

Here is an interesting field for some students with a 
bent for statistical research; for if we knew to what extent 
our man-power has been multiplied by the invention, con- 
struction and use of mechanical contrivances of various 
kinds, we loould be in possession of a scientific fact of pro- 
found importance from the standpoint of utilitarian eco- 
nomics. 

These brief studies of the senses will help us to under- 
stand, to some extent, at least, the enormous increase in 
manpower in modern times as the result of mechanical aids 
to be discussed in the lessons to immediately follow, and 
will help us at the same time to clear up some of the con- 
fusion which may have burdened our own thinking and 
talking on economics. 



LESSONS 
No. FIFTEEN, SIXTEEN, 

SEVENTEEN, EIGHTEEN, 

NINETEEN, TWENTY 

and TWENTY-ONE 



Copyright 1921 



From the School of Utilitarian Economics 85 



The Tools of Labor 



ImpossiMlity of Supplying Human Wants Without 
Tools — Definition of Tools — Type and Variety Show Human 
Progress — Machines Have Vastly Multiplied Man Power — 
Some Illustrations — The Age of the Machine. 

Lesson No. 15 

Without the tools with which modern 
workers of all kinds have been provided we 
could not today do the world's work. It 
would be physically impossible to supply 
the normal wants of each day. If all the 
tools we now use in the routine of each 
day should suddenly be taken from us an 
overwhelming majority of human beings in 
all civilized countries would, in a brief 
space of time, be face to face with indus- 
trial and commercial stagnation, and the 
gaunt figure of starvation would be stag- 
gering along the highways of the world. 

By tools we mean everything that is used 
to facilitate the production and distribu- 
tion of what we need and must have, as 
well as those things that are used to aid 
in the production of many things consid- 
ered less essential by some writers because 
they are classed as luxuries. 

When we consider the tools of labor we 



86 Fifty Lessons on Utilitarian Economics 



are brought face to face with an endless 
number of useful things; indeed, it would 
take more than a single book merely to 
name them, without any reference to their 
origin, history or uses. Pen or pencil, in 
the case of men and women who write for 
a living, or for men and women who keep 
books, or preserve public or private records, 
or who do any other kind of clerical work; 
or an axe and a saw, in the case of a 
woodsman; or hammer and tongs, in the 
case of the blacksmith; a hoe and a plow, 
in the case of the farmer, — these and many 
others that might be mentioned are simple 
tools. Anything from the simplest and 
crudest of things, up to the most intricate 
and complex of our mechanical creations, 
may be regarded as a tool, so long as it 
answers some useful purpose in the pro- 
cesses of production and distribution. 

Viewed in this broad utilitarian light, 
a perfecting press is as much a tool in the 
printing business as the printer's rule, and 
a mogul engine is as much a tool as the 
wrench with which the railroad engineer 
tightens his loose screws. 

If we could assemble in one building all 
the tools with which men and women labor 
in all the different countries of the world 
today we would have what would represent 






From the School of Utilitarian Economics 87 

an approximately complete history of hu- 
man culture in its various phases of un- 
folding. Not only so, but, step by step, 
we could trace our economic history from 
the simplest of its beginnings up to the 
present, for such a display would not only 
show us the crude, awkward tools used by 
savages, but the tools also of the Barbaric 
Age, and of our own time. Moreover, such 
an exhibition of the things we use, things 
we have improved, and things we have out- 
grown, would render still more impressive 
the gratitude we owe for what we found 
ready for our use, convenience and comfort 
when we arrived on the scene of action. 

What tools have added to the man power 
of the world it is impossible to tell. No 
reliable estimate of these meaningful sta- 
tistical facts is anywhere available, so far 
as we know. But we know, in a general 
way, man has multiplied himself many 
times. Man has increased his physical 
power just as he increased the range of his 
natural senses. 

There is a saying among carpenters that 
the strength of a nail is equal to a man's. 
The holding power of some nails is very 
much greater than a man's. In the case of 
the screw, which belongs to the nail family, 
this holding power is many times multi- 



88 Fifty Lessons on Utilitarian Economics 

plied. Men probably morticed or pegged 
timbers together before they knew any- 
thing about the nail or the screw. 

A long time ago some man stuck a pole 
under a log, and by pressing down on the 
other end of the pole, found that he could 
greatly multiply his lifting power. This 
was the beginning of the lever principle. 
We passed from the lever to the pulley, 
and thus began the development of wheels. 
First we used only man power to operate 
the lever and the pulley, just as we first 
used man power to propel the two-wheeled 
cart, the forerunner of our vehicular won- 
ders. Then we tamed wild animals and 
used them to increase our power to lift and 
to pull ; and then, by slow degrees, we pass- 
ed into the age of steam, and from steam 
into the age of electricity. 

Meanwhile we had discovered ores and 
found out how to convert them into metals, 
out of which we began to make many things 
we had before made out of wood, stone and 
clay, and many other things we had never 
before made, but which had become neces- 
sary on account of the new demands of 
progress. It was the invention and con- 
struction of these things that made it 
necessary for us to find new agencies of 
power to lift and pull, such as steam and 



From the School of Utilitarian Economics 89 

electricity, for animal power alone would 
no longer answer our purposes even with 
the aid of the lever and the pulley and other 
hand contrivances we had pressed into use. 
Thus, through centuries of struggle, was 
slowly evolved the Age of the Machine, an 
age that is very wonderful, not only be- 
cause of the vastly increased power it has 
given the worker over the raw materials 
and forces of nature, but because also of 
the cleverness and variety of things man 
has been able to invent and construct to 
make work easier and less irksome and to 
greatly multiply his power for efficient 
service. 



90 Fifty Lessons on Utilitarian Economics 



The Tools of Agriculture 



Marked Progress in Form Economics — New Implements 
Replace the Old — Agriculture Now a Science — Power Cul- 
tivators and Other Modern Things on Farm — One Man Do- 
ing Work of Twenty Men and the Problem Thus Sug- 
gested — Should Not Get Pay of Twenty Men — The Reason. 

Lesson No. 16 

Progress in the invention and construc- 
tion of tools has not been more marked or 
more beneficial to mankind in any walk of 
life than in agricultural pursuits. It is a 
long cry from the simple implements used 
on farms even a quarter of a century ago 
to the more complex implements now in use 
in our fields of grain, cotton and other basic 
farm products. 

"The man with the hoe" of the painter's 
and the poet's fancy is extinct in all pro- 
gressive countries. Instead of a stupid 
biped leaning upon a crooked stick and gaz- 
ing upon the ground, with a brutish slant 
to his head, and "the emptiness of ages in 
his face," we find now a man of substantial 
intelligence, and of wide and cheerful out- 
look, tilling the soil in all civilized coun- 
tries. 

In America particularly progress in the 



From the School of Utilitarian Economics 91 

invention and making of new farm imple- 
ments, and in the substitution of motor 
power for animal power, has been most im- 
pressive. The harrow with wooden teeth, 
the hayfork made of a forked sapling, the 
crude wooden seed planter, gates and doors 
on wooden hinges, and pegged or latched 
with wooden devices, are things so rent 
that many men still living not only know 
about them, but once used them. Yet these 
things would be as much out of place on the 
modern American farm as would the crook- 
ed stick with a long handle, the ancient 
hoe made the subject of Millett's painting 
and Markham's verse. 

Agriculture has become a science. The 
evolution of the hoe, under the application of 
scientific methods in agricultural pursuits, 
is an interesting and instructive chapter in 
the history of tool development. The hoe 
was the forerunner of all the implements 
with blades and teeth that we now use in 
preparing the soil, and in cultivating and 
harvesting the crops we grow on our mod- 
ern farms. Even the latest and best im- 
proved of our motor cultivators owe their 
existence and usefulness to the simple wood- 
en hoe with which man first learned how to 
break and pulverize the soil. Besides there 
have been intermediate stages of develop- 



92 Fifty Lessons on Utilitarian Economics 

ment in the history of agricultural imple- 
ments, periods which stoutly link together 
all the ages of time and render more or less 
absurd the arbitrary divisions of time made 
by many older and contemporary econ- 
omists. 

We have not made agriculture what it is 
today. We have only helped to do it 

We did not discover the principle upon 
which we have built our complex cultiva- 
tors. These were passed on to us, and we 
have elaborated and improved them. We 
must not, therefore, take unto ourselves the 
whole credit for the enormous increase in 
the power we now exercise over the raw 
forces of nature, and conclude that because 
one man can now do the work of twenty 
on the farm he should therefore receive the 
pay of twenty men. Part of the wealth our 
one man produces with his machine, and 
the power he uses to operate it, must go to 
reward other men who have, in an indirect 
way, made it possible for him to do the 
work of twenty men. 

If a study of utilitarian economics should 
accomplish no more than to clear up this 
one vital confusion in the labor economics 
of today it would be well worth while, for 
all this demand for morey more, more — 
more wages, more profits, more everything, 



From the School of Utilitarian Economics 93 

— grows out of a failure to understand the 
profound economic truth that each of us, 
on the farm or in the factory, is actually 
doing only a fraction of what we seem 
to do. 

Only a part of my day^s work is mine, 
and it is the smallest part of it. Most of 
the credit for the day's result must go to 
other men. 

And this is as true in our factories, in 
our mines and elsewhere as it is on our 
farms, for everywhere we will find that men 
have increased their power for service by 
using both the talent and the labor of other 
men. 



94 Fiity Lessons on Utilitarian Economics 



The Tools of Industry 



Definition and Scope of Industry for Utilitarian Pur- 
poses — Listing Tools Used in Making and Using Lumber — 
Other Illustrations — Mutual Dependence of Tools, Men and 
Industries — Vital Significance of Knowing True Economic 
Relationships. 

Lesson No. 11 

Following the rule we have adopted in 
these lessons, we are not going to give any 
arbitrary meaning to the word industry. 
What we shall say about the tools of indus- 
try, however, for the purposes of this les- 
son, will relate mainly to the tools used in 
manufacturing establishments; and here 
again we will find man's genius and ability 
for multiplying his own power over the raw 
elements of nature displayed in many use- 
ful things and in many ways. 

Go into the woods where a giant fir is 
felled and a log sawed from it; follow the 
log to the mill where it is converted into 
lumber; follow the lumber to the carpenter 
or the cabinet maker where the material 
cut from your giant fir is put to its final 
uses in the making of a house or some sim- 
ple piece of furniture for the home, and 
then, reviewing and summarizing all the 



From the School of Utilitarian Economics 95 

processes from the very beginning of these 
useful energies, count and classify the tools 
used to achieve the final result. Here we 
have a comparatively simple process in the 
conversion of raw material into a finished 
product, a product in which we realize a 
utilitarian value. Shall we begin our count 
with the axe and the saw used to fell the 
tree? No; for the axe, and the handle in 
the axe, are the finished products of other 
energies which called into play other tools 
in other industries engaged in converting 
woods and metals into useful shapes; that 
is true of the saw also ; it is equally true of 
every tool we have seen applied to our fir 
log. Indeed if we desired to make a com- 
plete list of all the tools that have made it 
possible for us to use the material of the 
giant fir to build a house or make a piece 
of furniture, we would have to pass 
through many factories and examine many 
different processes before we could list all 
of them. 

If we should go into a flour mill, a steel 
plant, a cotton or woolen mill, or into one 
of our great packing houses, or into any 
one of a long list of highly useful and neces- 
sary industrial establishments, we could 
find a still more difficult problem if we un- 
dertook to list all the tools that contributed, 



96 Fifty Lessons on Utilitarian Economics 



\ 



directly and indirectly, to the output of 
these plants. 

What we would find, in the sum of it all, 
would be a condition of mutual dependence 
of tool upon tool, of material upon material, 
of industry upon industry, and of one 
group of men upon another group of men, 
in almost endless variety, until we had com- 
passed practically all of the complexities of 
our industrial, commercial, agricultural, 
financial, and scientific achievements. The 
axe and the saw are mutual aids. We need 
our combinations of wood and metal. Be- 
sides we must fuse our ores, and have many 
kinds of wood, and we must have many kinds 
of workers, many kinds of tools, many kinds 
of processes in many different parts of the 
country, where topographic and climatic 
conditions are wholly different, before we 
can realize the harmonious and useful re- 
sults that are now familiar to us even in 
the simplest and smallest of our industrial 
plants. 

This dependence of thing upon thing, 
and of men upon men, this merging of in- 
terests and energies in our modern econ- 
omic life, is a fact of profound importance, 
and yet a fact which too often is ignored by 
economists of all classes and all grades of 
opinion. But this disregard of our eco- 



From the School of Utilitarian Economics 97 

nomic fact of vital meaning is by no means 
confined to economists. It has crept into 
the industrial and general business life of 
America, and the world, has given rise to 
bitter class prejudices, wickedly influenced 
political groups, and not infrequently has 
found expression in unwise and intemper- 
ate legislative enactments. The result has 
been hurtful, for it has merely intensified 
foolish economic antagonisms, and, instead 
of helping to clarify some of our real indus- 
trial problems, it has left them still in con- 
fusion and with no real progress toward 
solution. 

What we need, in such circumstances, is 
a clearer understanding of our economic 
relationships, and a more intimate familiar- 
ity with the mutuality of our economic 
obligation. We are not independent; we 
are dependent^ thing upon thing , man upon 
man, industry upon industry, and when we 
begin to realize this truth, not only will the 
tools we daily use assume a pleasanter and 
a more poetic aspect, but we will also find 
ourselves making new appraisals of the 
men about us and putting a new and higher 
estimate upon the meaning and value of 
life as a whole. 



98 Fifty Lessons on Utilitarian Economics 



The Tools of Commerce 



1 



Relation of Commerce to Industry — Functions of Agri- 
culture, Industry and Commerce Stated — Some of the Tools 
of Commerce — Old Terminology and Technique Disregarded 
— The New Classification, Its Purpose and Meaning. 

Lesson No. 18 

There would be little to say of commerce, 
or the tools of commerce, if we did not have 
factories, farms and mines, just as there 
would be little to say of factories, farms 
and mines, and the tools used in these 
spheres of useful effort, if we did not have 
a commerce devoted to the distribution and 
sale of the products they yield. 

Agriculture and industry produce things 
having utilitarian value. Commerce dis- 
tributes and sells what Agriculture and In- 
dustry produce; and in these processes of 
distributing and selling commerce uses a 
very large number of things which, for 
economic purposes, may be classed as tools. 
The grocer must have his scales and his 
measures, the butcher his knife and his 
cleaver; the dry goods merchant must have 
his yard stick, the tailor his tape and his 
scissors, and so wherever we turn we will 
find that men engaged in different commer- 



From the School of Utilitarian Economics 99 

cial pursuits are using sometimes the same 
and sometimes different tools to facilitate 
the sale and distribution of their wares. 

By common custom weights and meas- 
ures were recognized long before we gave 
legal sanction to existing standards. In- 
deed custom had so impressed the need of 
them upon the public mind that English- 
men insisted upon a recognition of these 
standards in the Great Charter. True, it 
is not usual to class these things as tools; 
nevertheless they are tools and have very 
high utilitarian value. The foot measure 
or the yardstick is as much a tool in the 
hands of the merchant as it is in the hands 
of the carpenter, and the tailor without his 
needles and his scissors is as unthinkable 
as a woodsman without his axe and his 
saw. 

The tools of commerce cover a wide range 
and include a vast variety of things. The 
pencil with which the clerk records his 
sales; things supposedly so inconsequential 
as pins and needles; the laboratory equip- 
ment of the chemists who test and analyze 
solids and liquids to determine their fit- 
ness and value as foods and for many other 
purposes; implements of great delicacy 
used by druggists and jewelers; the agen- 
cies of transportation used in the distribu- 



100 Fifty Lessons on Utilitarian Economies 

tion of products, — ^vehicles, engines, cars, 
ships, flying machines, — these, for utili- 
tarian purposes, may fairly be regarded as 
some of the tools of commerce. 

In a word all the devices used in sales- 
manship, in standardizing articles of com- 
merce in the matter of quality as well as 
quantity, and all the agencies used in the 
distribution of these articles, may properly 
be classed as the tools of commerce. 

Even pipe lines used for the distribution 
of water for various uses, — for power, for 
irrigation or for home purposes ; or for the 
distribution of gas or oil ; or lines of com- 
munication, such as the telephones, tele- 
graphs, cables and the wireless systems, — 
these, too, are tools and tools of indispens- 
able utilitarian value in modern commerce. 
Storage plants, refrigerators, elevators for 
grain, containers of little and large ca- 
pacity, and an almost endless list of things 
in common daily use by tradesmen help to 
make up a rather remarkable collection of 
devices used to expedite the movements of 
modern commerce ; and if objection is urged 
to the classification of these things as tools 
of commerce we wish to remind the student 
that we are not teaching old economics, and 
are not much concerned, therefore, about 
either the technique or the terminology of 



From the School of Utilitarian Economics 101 

the old school. We are discussing econom- 
ics from a utilitarian point of view and in 
the light of modern conditions, and if we 
should permit our reasoning to be colored 
by a foolish respect for old rules, rules we 
have outlived, we would defeat the supreme 
purpose we have in view, which is to fresh- 
en public interest in a supposedly dry sci- 
ence by stripping it of the untruths and the 
half-truths that cumber and confuse it and 
giving to it the body of a helpful, whole- 
some and cheerful philosophy. 



102 Fifty Lessons on Utilitarian Economics 



Tools of the Arts and Sciences 



What Science Contributes to Modern Economic Life — 
Some of the Tools of Science — Devices in Daily Use — Safety 
Appliances — Mechanical Protection Against Fires and 
Crimes — Tools of Art — Music as an Example. 

Lesson No. 19 

What to include and what not to include 
in a discussion of Arts and Sciences, and 
the part they have played in our economic 
development, presents a difficult problem. 
We have attained such high standards in 
agriculture, in industry, in commerce, in 
the making and marketing of what we pro- 
duce, in the packing of goods and in ar- 
ranging them for public display, that if we 
could put all our fields, factories and stores 
together, and roof them over, we might 
very easily look upon it as a great art 
museum. But our concern now is with the 
utilitarian value of our arts and sciences, 
and the nature and character of the tools 
used in these spheres of endeavor. 

It would be easier to pick out the things 
science has not contributed to our economic 
development and general progress than it 
would be to name the things science has 
done for us. 



From the School of Utilitarian Economics 103 

Science is our constant aid in agricul- 
ture, in industry, in commerce, in every 
little and large division of human labor. 
It has dreamed out and practically worked 
out the principles upon which we have built 
all our mechanical contrivances and has 
given to us a vast and almost unlimited 
control over the forces of nature. Without 
the aid of Science and the tools with which 
science has provided us, we probably would 
be still groping in the shadows, relying 
more upon luck than upon law for each 
day's progress and using force instead of 
reason in meeting the problems of our time. 

But what tools has science used in ren- 
dering us this aid? We examined a few 
of them in the series of studies devoted to 
Natural Weapons. They include all of the 
five natural senses, sight, hearing, the sense 
of smell, taste, and the sense of touch, and 
all the agencies used to extend and amplify 
these senses. They include all the instru- 
ments used to determine the properties of 
things. Instruments which have made wire 
and wireless communication possible; the 
delicate and diverse things with which our 
chemists labor; the instruments with which 
we weigh the air, measure wind velocities, 
forecast changes in temperature, foretell 
the coming of violent winds, and record 



104 Fifty Lessons on Utilitarian Economics 



) 



tremors in the earth caused by volcanic 
eruptions and settlings in old faults in the 
earth ; the Xray which enables us to photo- 
graph broken bones or foreign substances 
buried in the human body; all the nice in- 
struments used by surgeons and physicians 
in restoring men and women to a condi- 
tion of economic efficiency, — these and a 
vast array of other things are constantly 
used by men of science to sustain and fur- 
ther our economic progress, general safety 
and social well-being. 

Moreover science has contributed many 
useful devices for protection against fire 
and crime; indeed since the installation of 
the latest and best improved mechanical 
devices to guard against fires and crimes 
one fireman and one policeman have be- 
come equal to many firemen and many po- 
licemen under the old order. 

Science has made even more important 
contributions in the many safety appliances 
that we now use in industrial pursuits to 
protect workers against serious bodily in- 
jury and possible death, and in many other 
things which enable us to keep our foods 
pure and wholesome for an almost indefi- 
nite period of time. 



' From the School of Utilitarian Economics 105 

I What are the tools of art? A good 
writer, with a clear mind and a clean con- 
j science, can do much with one lead pencil 
ii or one pen and an inkwell. And think of 
|: the high positions to which many men and 
I women have climbed over the keyboard of 
I the typewriter. Or take the home town 
I band : Each instrument in it is a tool for 
l' the man who plays it. Many men and wo- 
men make their living out of their ability 
to perform artistically and pleasingly on 
various musical instruments. But whence 
these instruments men and women use to 
delight or depress us? Behind each of them 
there is a long series of important and 
highly useful economic events. It has re- 
quired labor, and unusual skill, and, in 
some instances, tools of a very delicate kind 
to give form and value to musical instru- 
ments. Not many of our musicians could 
make the instruments upon which they per- 
form with such exquisite art. Paderewski 
cannot make a piano. Caruso did not ride 
into fame singing songs of his own crea- 
tion. None of our virtuosos have been 
able to make the instruments upon which 
they performed, or to vv/^rite all the scores 
they have interpreted. None of our great 
actors and actresses have become famous 
interpreting plays of their own creation. 



106 Fifty Lessons on Utilitarian Economics 

Nor do we owe many of the helpful acces- 
sories of the modern stage to them. 

The point we are here again seeking to 
emphasize is the mutual dependence of men 
and women in every sphere of human so- 
ciety, in the arts and sciences, no less than 
in the commoner and more prosaic callings 
of everyday life. 

This mutuality of interests, this merging 
of the talents and efforts of individuals and 
groups of individuals, should make the good 
of all the concern of each and the good of 
each the concern of all in modern society. 

What we have said of music will give us 
a key to the utilitarian values of all the 
other arts, and opens up a rather alluring 
field for investigation and study on the 
part of ambitious students. For instance: 
What tools are used by painters? By 
sculptors? By decorators? By architects? 
By the makers of vases? Or the designers 
and makers of our expensive and luxurious 
fabrics? Or the many useful and orna- 
mental things we find in the modern home? 
Tools used in the production of such ex- 
quisite creations are worthy of study, for 
they have not only high utilitarian value, 
but an origin and a history also that are 
of profound meaning from the standpoint 
of utilitarian economics. 



From the School of Utilitarian Economics 107 



The Tools of Construction 



Tools That Have Distinctive Constructive Use and Value 
— Constructive Tools Sometimes Destructively Used — Im- 
plements of Peace and Progress — Misuse and Abuse of Tools 
and Talents — The Two Ways. 

j Lesson No. 20 

I Certain tools used by mankind have a 
! very distinct constructive value. Others 
may fairly be classed as tools of destruc- 
tion. But here again we will experience the 
old difficulty we have frequently adverted 
to in these lessons, namely: The almost 
impossible task of drawing an arbitrary 
distinction between the forces and tools 
used in our economic life. 

Take any of the constructive tools, for 
instance, we use in times of peace. The 
things that we use to build houses, rail- 
roads, ships, airplanes, and in the making 
of guns and explosives, and other things 
in time of peace may also be used to con- 
struct forts, battleships and munitions in 
times of war. 

Of the tools that have a distinct Con- 
structive value we may mention the plow, 
the cultivator, the harvester and other im- 



108 Fifty Lessons on Utilitarian Economics 

plements used in agricultural pursuits. 
Then there are a vast number of tools used 
in making what we have come to know as 
luxuries and non-essential articles, such as 
jewelry and other personal ornaments, cer- 
tain confections and drinks and other such i, 
things, which may be classed as not de-i 
structive in character. 

Type, the printing press and all the 3 
many things that go to make up a modern i 
printing plant cannot be said to be destruc- 
tive in their own right; and yet we know 
that these things frequently are put to very 
destructive uses. When used to inflame 
popular passion, stir up prejudices and 
hatreds, preach false doctrines, destroy the 
reputations of men and women in both 
public and private life, encourage disobedi- 
ence to the law, incite violence and blood- 
shed and endanger the public peace and the i 
public safety, the tools of the printshop can i 
become as destructive as the most powerful i 
and dangerous of our explosives. 

But these same things can be put to con- ■ 
structive uses equally as influential for the : 
good and upbuilding of society. By stand- 
ing for right and reason as against wrong 
and the loosened passions of mankind; by 
upholding the integrity of the law and 



J 



From the School of Utilitarian Economics 109 

preaching patience, tolerance and justice, 
and by flaring the truth when truth is un- 
popular, type and all the other tools of a 
printing plant can be used to build up a 
sane, wholesome and constructive public 
opinion and thus help hold in restraint 
forces of evil that would batter down or- 
derly institutions and substitute the chaos 
of anarchy for peaceful conditions and nor- 
mal, healthy progress. 

Many of the bloody spasms which mark 
and mar the pages of history have been due 
more to the destructive use of constructive 
tools than perhaps to any other single 
cause. 

Many men and women use their eyes to 
impair their own economic and social use- 
fulness and to destroy their own charac- 
ters. They read the wrong literature; get 
the wrong view of public questions; fill 
their minds with wrong information; ab- 
sorb wrong opinions, and, by the slow pro- 
cesses of saturation, become utterly blind 
to the truth and thus lose sight of all 
utilitarian values in our economy. 

Yet we do not always put the eye to 
destructive uses. Most men and women 
put a higher value on the sense of sight 
and use it for constructive and noble pur- 



110 Fifty Lessons on Utilitarian Economics 

poses. They read good books; come to 
know good and beautiful words instead of 
words that are coarse, wicked and vulgar; 
get the just and the cheerful view of 
things; color their own opinions by the ! 
opinions of men and women of light and I 
leading; and thus build up and strengthen 
their own characters and become useful 
and more efficient as members of society, 
and, as they grow in the graces, add to 
their own and the happiness of their fel- 
lows. ■ 

m 

Once let us realize the utilitarian value 
of things, of the senses, of all our natural 
weapons, and all the tools we use in doing 
the world's work and contributing to the 
general wellbeing of mankind, and it will 
be easy enough for us to understand the 
difference between the destructive and the 
constructive use of these things; for what 
we have been saying here of a few of the 
things we use applies to nearly all of the 
things we use. 

Always two courses are open to us when 
we come to use a talent or a tool of any 
kind: By taking one of them, we will 
make wrong use of talent or of tool, and 
reap evil; by taking the other we will make 
right use of it, and reap good. 



From the School of Utilitarian Economics 111 



Tools of Destruction 



Some Things That Are Exclusively Destructive — Battle- 
ships, Bombs, Floating Mines and Other Things — Utilitarian 
Value of Some Agencies of Destruction — Constructive Ener- 
gies Frequently Deperid Upon Destructive Agencies — Subse- 
quent Studies. 

Lesson No. 21 

When we come to consider the tools of 
destruction we naturally think of battle- 
ships, long range guns, submarines, float- 
ing mines, bombs, poison gases and many 
other things that have, in the forms which 
they assume, no peaceful and constructive 
uses. 

Constructive tools, constructive material 
and agencies, and constructive skill are 
used to make these exclusively destructive 
things. In classing these things as exclus- 
ively destructive in character we are not 
unmindful of the theory of their defensive 
value, or of the theory that while they are 
destructive in themselves, from an economic 
point of view, they frequently "prevent 
greater destruction than they cause. But 
we are measuring these things by utili- 
tarian standards and are classing them ac- 
cording to the relation they bear to normal 



112 FiUy Lessons on Utilitarian Economics 

social and economic conditions. The ma- 
terials out of which the agencies of de- 
struction are made, the tools used in mak- 
ing them, and the man power employed in 
doing the constructive work might easily 
be put to other and different uses, though 
we are not here venturing any opinion as 
to either the wisdom or the necessity of the 
one course or the other. Our only concern 
is in the economic aspect of the problem, 
viewing it always from a utilitarian stand- 
point, and having a regard only for utili- 
tarian values. We have defined these 
values, we think, with sufficient precision 
to enable the student to search out his own 
conclusion in any case which may seem to 
be debatable. 

Poison gases, like some of the heavy and 
destructive explosives of different kinds 
used in war might be usedfor peaceful and 
constructive purposes also, though we do 
not know enough of these things to know 
what such uses might be. We know, how- 
ever, that poisons and gases of practically 
all varieties have a possible utilitarian value, 
and it is not unreasonable to assume that 
some of these frightful compounds, such as 
were used in the recent great war, might 
have value of this kind. 



From the School of Utilitarian Economics 113 

Dynamite is a powerful agency of de- 
struction. We are familiar with some of 
the destructive uses to which this agency 
may be put. But we are also familiar with 
the peaceful and constructive uses of dyna- 
mite; as in blasting in railroad construc- 
tion in mountain regions where tunnels are 
bored through heavy, solid rock formations, 
or in clearing land of stumps and logs, and 
in various other kinds of constructive and 
highly useful work. 

In considering tools and all agencies that 
are destructive in character we should not 
overlook the vital economic truth that de- 
struction often is necessary to accommodate 
the processes of construction. We must 
tear down an old building, or an unfit build- 
ing, before we can build a new fit struc- 
ture. We must dismantle old machines to 
make room for new and better ones. These 
processes are as pronounced in human so- 
ciety as they are in domain of nature, and 
are as necessary also. 

It is plain, therefore, that the tools of 
destruction have their proper utilitarian 
value, as when they are used to further 
and facilitate constructive energies made 
necessary by our growing economic de- 
mands. 



114 Fifty Lessons on Utilitarian Economics 

No attempt is made in this series of les- 
sons on tools to exhaust the subject; indeed 
that would be an impossible undertaking 
from the standpoint of utilitarian values, for 
tools, viewed from this standpoint, include 
all the things we use to keep the industry 
and general business of the world on a prog- 
ress basis. 

But these studies, in brief outline, of the I 
nature and function of Tools, coupled with * 
preceding lessons, which had to do with 
Man, his place in industry, and his duties 
and obligations, put us in a position to take 
up in subsequent lessons the big subject of 
Production. 

In a word, we have considered Man and 
the Tools with which he does his work ; we 
shall next see what Man does with his 
Tools, how he uses them, and what he pro- 
duces with them. 



LESSONS No. 

TWENTY-TWO, TWENTY-THREE, 

TWENTY-FOUR, TWENTY-FIVE, 

TWENTY-SIX, TWENTY-SEVEN, 

TWENTY-EIGHT, and 

TWENTY-NINE 



4 



Copyright 1921 



From the School of Utilitarian Economics 115 



Who Is a Producer? 



Production Defined — Prime Factors in the Processes of 
Production — Some of the Energies and Agencies Involved 
in These Processes — Many Persons and Forces Employed in 
Making Things of Use — Simple Illustrations Show Diffi- 
culty of Finding Producer. 

Lesson No. 22 

In attempting to point out some of the 
prime factors in production, and the utili- 
tarian value of each of these factors, we 
should first make plain precisely what we 
mean by production. 

Production, for our purposes, and for 
all legitimate economic purposes, may mean 
one or the other of two things: It may 
mean the sum of the energies employed in 
making useful things, or it may mean the 
sum of things thus made. Thus when we 
speak of the production of wheat, we may 
mean the number of bushels harvested in 
a given season, or we may refer to the en- 
ergies involved in planting, cultivating and 
harvesting wheat. 

In the course of these studies we shall 
have occasion to use the word production in 
both of these senses, though, in the main, 
the word will refer to the various energies 



116 Fifty Lessons on Utilitarian Economics 

that contribute to the processes of produc- 
tion. These energies extend over a wide 
range, beginning with the simplest of our 
farming operations and climaxing in the 
activity of the most complex and most won- 
derful of our mechanical devices. Nature's 
energies, as in the flow of streams and the 
ebb and flow of tides, and the energies of 
the worker, of capital, of the thinker, all 
contribute to the processes of production, 
and we shall have occasion in these studies 
to consider the function and importance of 
each of these agencies. 

No part of economics is more interest- 
ing, or more far-reaching and diverse in 
its ramifications, than the vital part which 
has to do with the processes of production ; 
and no part of economics is so little under- 
stood even by respectable economists. 

Studying production from a utilitarian 
point of view, we shall undertake to avoid 
much of the confusion into which other 
economists have fallen, and thus, perhaps, 
help to clear the popular mind of misunder- 
standings which have become, in recent 
years, a prolific source of bitter antagon- 
isms, and a breeder of discontent and un- 
restrained violence. 

Our task in studying the problem of pro- 
duction is to find out the nature and im- 



From the School of Utilitarian Economics 117 

portance of all the agencies contributing to 
these interesting and intricate processes, 
and to apportion credit according to the 
utilitarian value of the service rendered by 
each agency. 

Of course in what we say of the word 
'^producer/' we are not unmindful of the 
fact that the word, in popular usage, has 
a very definite meaning. But we wish to 
point out the error involved in the common 
use and understanding of the word, for 
this error, we believe, is responsible for 
many other errors that burden the econom- 
ic thought of the day. 

The wheat farmer is not a producer of 
wheat; he merely plants the seed, cultivates 
the plant and harvests the grain. Wheat 
is produced by many agencies, some of them 
very remote from the man who takes care 
of the plant and harvests the grain, and 
that is true of practically everything we 
produce. 

Who is a producer? More error has been 
piled around the word ''producer'' than 
around almost any other word in modern 
economics. This is written with an ordi- 
nary pencil. Who "produced" the pencil? 

The final act of production was perform- 
ed by the user when he sharpened the point 
of the pencil. It was not usable until this 



118 Fifty Lessons on Utilitarian Economics 

act was performed. Yet the user of the 
pencil who performed this simple, but ne- 
cessary act, did not produce it. Nor did the 
man who cut into proper shape the wood 
out of which it is made "produce" it. 

Somebody, and a different somebody, sup- 
plied the lead. Some other somebody sup- 
plied the chemicals used in coloring the 
wood, and a long list of somebodies sup- 
plied the implements, and machinery, and 
power necessary to the production of the 
pencil. 

Moreover, the materials used in making 
the pencil, and the materials used in mak- 
ing the mechanical devices used in making 
it, were gathered from widely separated 
points. Transportation, and the facilities 
necessary before transportation becomes 
possible, intervened between points where 
the raw materials were gathered and the 
point where they were assembled, and 
again between the point where the pencil 
assumed shape, and the store where the 
user finally bought it. 

Who first discovered that carbon crystals 
could be used to make marks on smooth 
surfaces? 

Graphite is the name we give to these 
carbon crystals used in making the lead 
for our pencils. 



From the School of Utilitarian Economics 119 

Whoever made the discovery contributed 
something toward the production of lead 
pencils. 

We are glancing now only at a few of 
the hands that have contributed something 
towards the production of a thing so com- 
mon in every day use that its history has 
almost ceased to be interesting. If all the 
hands wrapt up in the history of a lead 
pencil could be raised, so that we might 
count them, but only those having some 
connection with the processes of produc- 
tion, we would be amazed, not only by the 
number of hands, but also by the variety 
and economic importance of useful en- 
ergies loosened by these processes of pro- 
duction. 

We are still considering the question: 
Who is a producer? We have not answered 
it; but we have progressed far enough to 
understand that pencils are not produced 
by workers in pencil factories, though these 
workers play a vital part in the processes 
of production. 

Where and when production begins pre- 
sents one of the most difficult of all eco- 
nomic problems, for production, when we 
consider an article finished for utilitarian 
purposes, is merely the culmination of 
many energies, some of them reaching back 



120 Fifty Lessons on Utilitarian Economics 

into ages so remote from our time that it 
is impossible definitely to trace their origin. 

We nibble a piece of cheese. Who made 
the cheese? Not any of the persons who 
had anything to do with it from the time 
the milk out of which it was made, left the 
goat or the cow, to the time when we bought 
the cheese. Nor was it produced by the 
goat or the cow. We convert milk into 
cheese. We get milk from the udders of 
goats and cows. But goats and cows do 
not produce milk. The goat's and cow's 
part in milk production^ outside of the en- 
ergy they expend in feeding, is confined to 
the extraction of lacteal properties from 
the food they consume. They do not pro- 
duce food. Here we find the planter, cul- 
tivator, cutter and thrasher of grain, the 
haymaker, and a long list of other persons 
usefully contributing to the production of 
the milk, out of which another group of 
persons made the cheese we are now nib- 
bling. Nor is that all. Who first tamed 
and domesticated the cow or the goat? 
V\^ho first discovered that milk from these 
animals is good food for human beings? 
Who first discovered that the milk of goats 
and cows could be converted into cheese? 
All these questions, and many more of like 
import, must be answered when we come 



From the School of Utilitarian Economics 121 

finally to answer the question: Who pro- 
duced the cheese? 

The same method must be followed when 
we consider any other article of common 
use and value. 

We hear a great deal of the producer, 
much of it altogether unscientific, and 
wholly misleading because of the false as- 
sumption that the person who completes the 
processes of production is the producer. 
As a fact he is only one link in a very long 
chain, an important and necessary link, to 
be sure, but only one among many equally 
as important and necessary links in the 
processes of production. 

In modern industry, and in utilitarian 
economics, the word producer must be con- 
sidered in two distinct relations. But in 
neither case is it sufficiently apt or ac- 
curate to justify an absolute classification 
of any person as a producer in the full and 
legitimate meaning of the word. When we 
speak of a shoemaker as a producer of shoes 
or a shinglemaker as a producer of shin- 
gles, all we mean in either case is that these 
persons have completed the process of pro- 
duction in the case of shoes or shingles. 

The logical conclusion to be drawn from 
these reflections is that it is absolutely un- 
scientific, and therefore inaccurate, to 



122 Fifty Lessons on Utilitarian Economics 

speak of any person as a producer except 
in the purely relative meaning of the word. 
In no case can we complete the processes 
of production Today without drawing on 
the energies and talents of Yesterday ; and 
if we attempt to leave Tomorrow out of our 
reckoning, we will leave hope out of it, for 
Tomorrow is not only a Market place for 
our wares, but it is also the home of our 
dreams of reward. 



From the School of Utilitarian Economics 123 



Nature^s Share In Production 



Impossidle to State Nature's Full Contribution to Pro- 
ductive Processes — Nature Supplies Materials and Forces 
Used in Production — Exemplary Value of Earth Worm's 
Work — Shows Benefit of Cultivation — Winds, Tides and 
Flow of Streams — Other Natural Aids. 

Lesson No. 23 

When we speak of nature^ s share in pro- 
duction we have no idea of undertaking the 
impossible task of defining exactly the ex- 
tent and value of nature's contribution to 
production; indeed, we cannot exactly de- 
fine the share any of the agencies have in 
.piling up the sum total of the things we 
now produce. At the same time, from the 
standpoint of utilitarian economics, in 
which we are seeking to give new color and 
new meaning to an old science, it would be 
a mistake not to give very serious consid- 
eration to the part nature plays in all our 
useful energies. 

In the first place we must go to nature 
for all the materials and all the forces we 
use in the processes of production. Not 
only so, but many of our most useful and 
valuable ideas in mechanics and in other 
applied sciences, are either borrowed from 



124 Fifty Lessons on Utilitarian Economics \ 

1 

nature or suggested by the operation of 'j 
the natural forces around us. Nature had 
been using the flow of water to sluice hills 
and cut through hard, rocky surfaces of the i 
earth long before we learned how to do the ' 
same thing with pumps, pipes and hose; 
nature used the winds to scatter seeds and 
to distribute various forms of life over the 
earth long before we had discovered the 
use and value of sails as an aid to naviga- 
tion and commerce. 

Darwin devoted an entire book to a dis- 
cussion of worms that burrow the surface 
of the earth and the vital part they play 
in the vegetable kingdom. These worms 
form a kind of digestive system for plant 
life, breaking and crushing stems and 
leaves, and in other ways help to keep the 
soil in fit condition to take care of the seeds 
and roots nature must rely upon to revege- 
tate vast areas of the earth's surface. So 
well is this work done that even the most 
delicate of our plants find it possible not 
only to maintain themselves, but also to re- 
produce themselves in the apparently hard 
soil over which we walk in rural districts. 
Thus it is conceivable that the earthworm 
may have suggested many things to us in 
the matter of cultivating the soil and in 



From the School of Utilitarian Economics 125 

taking proper care of the many useful and 
beneficial plants we have domesticated. 

The uses to which we put the winds, the 
tides, the flow of streams and other natural 
energies in our everyday economic life are 
too familiar to need special emphasis. Yet 
we are still far from realizing the maxi- 
mum use and value of these agencies. In 
time we will harness and use a vast amount 
of energy that is now going to waste all 
around us. We are only at the beginning 
of the almost unlimited use to which we 
may put the power of our flowing streams, 
our tides and our winds. 

Besides, consider some of the other uses 
we make of water in our modern economic 
life. We float a big part of our commerce 
on it; we use it to make the steam that 
drives the wheels of industrial plants; we 
convert it into ice and thus use it to pre- 
serve vast storehouses of food against the 
deteriorating influences of summer heat; 
we use it to keep our city clean by washing 
away the impurities that might breed dis- 
eases and endanger life and we rely upon 
it to protect our big and little urban cen- 
ters against fire. 

Moreover, water is a prime essential in 
the preparation and mixture of many of 
our most valuable foods; indeed, some of 



126 Fi-fty Lessons on Utilitarian Economics 

pur foods would be not only unpalatable, 
but impossible without water. 

Here we are considering only some of 
the natural forces and only part of the part 
they play in modern economic life. 

Take water, for instance, when we have 
converted it into steam: Without again 
drawing on nature's storehouse for wood, 
or coal, or oil, we could not convert water 
into steam. We would not have the neces- 
sary heat. Nor would we have ice in the 
necessary commercial quantities unless we 
had heat. Nature provides us with the ma- 
terials to be used in the making of heat. 
But whence the coal, the oil and the wood? 
Without the sun's heat, and the tremendous 
and vital earthly energies loosened by it, 
we would not have coal, or oil, or wood. 
The heat of the sun, a natural agency ^ has 
made possible these chemical combinations, 
and many others, that we daily use in our 
economic life. Indeed the consequences of 
the withdrawal of the sun's heat and en- 
ergy from the earth are so appalling, in 
the view of some scientists, that we cannot 
even think of them Without shuddering. 

If we go to nature for the energy, or 
for the things we depend upon for the en- 
ergy we use in modern industry, we must 
also go to nature for the materials upon 



From the School of Utilitarian Economics 127 

which we are to use this energy, and also 
for the materials we use in making the 
tools and other mechanical appliances and 
devices we employ in converting raw things 
into useful shape. In a few words, for all 
of the things and agencies having utili- 
tarian value, we must, in the final analysis, 
depend upon nature. Nature's share in 
production, therefore, is very great, so very 
great, as a fact, that if we were to attempt 
to state it in terms of mathematics we 
would scarcely be able to understand it. 



128 Fifty Lessons on Utilitarian Economics 



The Worker^s Share In Production 



Considered as Unit, Worker Is Only a Fraction in Pro- 
ductive Processes — Utilitarian Standard of Valuing Produc- 
tive Service — Error of Regarding Finisher of Article as 
Producer — Personal Unit as Basis for Determining Service 
Value — Prices, Wages and Profits — Labor Cost in Final 
Stages of Production Nominal. 

Lesson No. 24 

No economist worthy of the name would 
attempt to understate or undervalue the 
worker's share in modern production, nor 
should any honest economist, as a mere 
pander to the prejudices and passions of 
men and groups of men, attempt to over- 
state and overvalue this factor in produc- 
tion. 

Considered merely as a uit, among many 
other units equally potential and equally 
valuable as contributors to the sum of our 
productive energies, the worker, measured 
in terms of manpower, is a mere fraction, 
though a very necessary and very vital 
fraction. 

When we say the worker is a necessary 
and vital fraction in the processes of pro- 
duction we have in mind the part each unit, 
that is, each individual, must play in order 



From the School of Utilitarian Economics 129 

to achieve a given result in industry. One 
unit must start the energies that are to end 
in a finished product^ a product ready for 
use, and having utilitarian value in at least 
a potential sense; and many intermediate 
units must carry these energies forward 
until we reach the point where some unit 
must contribute the final energy which is 
to convert the raw material into a finished 
product. 

The common and costly error in modern 
economics is in regarding the finisher in a 
long series of productive events as a pro- 
ducer; for this error inevitably has led to 
an overvaluation of the services rendered 
by the final unit in productive processes, 
and to an undervaluation of the services 
rendered by units equally as important 
and necessary during the long processes 
that culminate in a finished product. 

No error in modern economics has been 
more prolific of harm, nor has any error 
done more to confuse and bewilder stud- 
ents of economics, than the wholly unten- 
able assumption that the finisher of an ar- 
ticle is the producer of the article. 

As a simple economic truth if we should 
today set ourselves to the task of finding the 
producer in our modern industrial system, 
we would need something more than the 



130 Fifty Lessons on Utilitarian Economics 

lantern Diogenes used in his search for a 
wise man. Plainly it is a question whether 
we can anywhere, in any sphere of useful 
activity, put our hands upon a man in in- 
dustry and say: "Here is a producer." 
Only in a very limited sense can the finish- 
er of an article be regarded even as a com- 
plex of the energies which have resulted in 
production, for it cannot fairly be claimed 
that all the physical and mechanical en- 
ergy, and all the skill necessary to produc- 
tion depend finally and absolutely upon the 
application of the energy and skill of any 
particular finisher. It would make no dif- 
ference, for instance, to timber cruisers 
and timber cutters, or to the men employed 
in a sawmill, whether the lumber is to be 
converted into a finished product by cabinet 
makers f or builders of houses; their pro- 
ductive energies would still find expression 
in the finisher's work, regardless of the 
final utilitarian form to be assumed by the 
material they helped to produce. This 
is as true of metals and other materials as 
it is of woods. 

Moreover, we frequently find finishers 
using mechanical aids, just as other units 
in the process of production use mechanical 
aids, to greatly increase, but in a nominal 
sense only, what they contribute to produc- 



From the School of Utilitarian Economics 131 

tion; and this brings us to the crux of the 
problem of the worker's share in produc- 
tion, and what he should receive in return 
for his contribution in labor and skill. 

The worker^ s share in production begins 
with the first application of labor or talent 
to raw materials, and does not end until 
the finished product is in the hands of the 
person who is to use it. 

Within this rule we must include all per- 
sons, all tools and machines and makers 
thereof, and all agencies necessary to trans- 
port, handle and distribute any article of 
common use and value. 

Each worker who has contributed to the 
result here considered should receive fair 
and just remuneration for his services. 

Production is the combined result of 
many energies and many talents, and each 
person should be paid in wages or salary 
a sum based upon the value of services per- 
formed. 

While the market price of the finished 
product does not absolutely determine the 
amount of wages to be paid the persons 
who have contributed to its production, it 
is nevertheless a vital factor, for the obvi- 
ous reason that the capital invested and in- 
volved in these productive processes must 
be allowed a fair margin of profit (1) to 



132 Fifty Lessons on Utilitarian Economics 

take care of unliquidated labor cost and 
other legitimate overhead charges, and (2) 
to provide for such extensions and ex- 
pansions as might become necessary in the 
successful operation of the plant. But we 
are not here concerned with an analysis of 
wages further than may be necessary to 
find out approximately what would be a 
just apportionment among workers of what 
Marxian economists mistakenly call sur- 
plus value. These economists make much 
of the fact that finishers of products, whom 
they call producers utterly in defiance of 
simple reason, get only a small per cent of 
this so-called surplus value, taking no note 
whatever of the vital fact that other work- 
ers who have contributed to the production 
of the finished article have also taken their 
toll for a worker's share in these processes. 

What the average worker of today con- 
tributes toward production is very small in 
comparison with the total value of these 
processes. It is determined very largely by 
individual skill, individual industry and 
individual efficiency; and when we come to 
define the share of the worker in produc- 
tion, or the share of any other person or 
agency, we must deal with the problem as 
a simple unit, one among many units con- 
tributing to the same result, and we must 



From the School of Utilitarian Economics 133 

deduct from it the value of services render- 
ed by all other units and all other agencies 
of whatever kind before we can arrive at 
a reasonably just and safe conclusion. 

The cost of labor in the final stages of 
production is a small fraction only of the 
total labor cost. It is erroneous, for in- 
stance, to assume that the labor cost of a 
pair of shoes is to be determined by what 
it costs to make the shoes in a shoe factory. 
There is labor cost in stock raising, in the 
tanning of hides, in the transportation of 
the hides, in the construction of suitable 
buildings for shoe making, and in the man- 
ufacture of proper machinery for a shoe 
factory. Besides we must take into the 
reckoning the labor and talent required to 
organize the enterprise, establish credits 
and man and manage the plant. These are 
all necessary factors in the processes of 
production, and men who perform these 
various services are workers, and should 
come in for a proper share of both the 
credit and the compensation that go to 
workers. We thus get back to each man as 
a unit in these productive processes, and 
must measure the value of each man's serv- 
ices to the industry according to the nature 
and importance of his work, and the degree 
of skill, industry and efficiency displayed 



134 Fifty Lessons on Utilitarian Economics 

by each worker. Any other rule, we think, 
is not only violative of sound economic prin- 
ciples, but very often does grave injustice to 
men employed in industry. 

What we are seeking to ^impress on the 
student in this lesson on "the worker's 
share in production" is the fact that the 
worker who finally concludes the processes 
of production contributes only a very small 
part of the labor necessary to produce the 
article. Take the case of a worker, a bak- 
er, for instance, who finishes the productive 
processes in bread making: He did not 
plant, cultivate, harvest and mill the wheat, 
nor clear the land on which it was grown. 
He did not make any of the implements 
used in planting, cultivating and harvest- 
ing wheat. Nor did he build the mill in 
which the wheat grain was ground into 
flour, or make any of the mechanical appli- 
ances used in grinding the grain. The 
grain land the flour were transported in 
carriers not supplied by the baker. Nor 
did the baker make the yeast, soda, salt, 
sugar and fats used in the processes of 
bread making. He did not make the mix- 
ing trays, pans, spoons and other things 
used in mixing and baking bread dough. 
He did not build the oven in which his 
bread is baked nor supply the fuel which 



From the School of Utilitarian Economics 135 

gives him the heat he needs to bake his 
bread. The baker's contribution toward 
the production of bread, therefor, is small. 
It represents only a fraction of the total 
labor cost in bread production, and this is 
as true of any article we produce today as it 
is of bread. 



136 Fifty Lessons on Utilitarian Economics 



Capital's Share In Production 



What Is Meant By Capital — Property Not to Be Ex- 
cluded from Just Remuneration — Profits Provide Necessary 
Funds for Expansions and Other Legitimate Purposes — 
How Capital Contributes to Productive Energies — Some of 
the Elements of Capital in Industry — Bistri'bution Depend- 
ent on Capital Facilities — Error in Regard to Capital's Re- 
ward. 

Lesson No. 25 

While we do not intend to give Capital 
any narrow definition in these studies, we 
shall, for the purposes of this lesson, deal 
mainly with that part of Capital which is 
made up of the accumulated products of 
labor — lands that are improved and pro- 
ductive, buildings, tools, machinery, rail- 
roads, ships, money, credits, and a consider- 
able number of things used in the produc- 
tive processes of today. 

By the unescapable logic of modern eco- 
nomic conditions, and practices that have 
come down to us through the centuries, we 
cannot exclude property, either tangible or 
intangible, from an important place in the 
processes of production. Nor is it now con- 
ceivable that the time will ever come when 
we can wholly exclude property from a fair 
and just remuneration for the uses to 



From the School of Utilitarian Economics 137 

which we put it in industry and in general 
business operations. How otherwise can 
we provide for replacements and repairs; 
for improvements and extensions; for new 
buildings and new machinery; for experi- 
mental enterprises in new fields of venture ; 
for the investigation and opening of unex- 
plored areas; new mineral deposits, new 
possibilities in agriculture and horticulture 
and many other things? Obviously prop- 
erty must yield something over and above 
the cost of labor and upkeep in order to 
make adequate provision for these con- 
tingencies and many others made necessary 
from time to time by new demands and a 
wholesome increase in the number of per- 
sons wanting and needing employment. 
While the facts here recited bring us face 
to face with the whole big problem of 
profits, we will defer a consideration of 
profits in detail until we reach another 
period in our studies, for our purpose, in 
this lesson, is to inquire into the nature and 
extent of capital's contribution to produc- 
tive processes. We have considered the 
worker's position in these processes, and 
have suggested a basis upon which we may 
possibly arrive at a reasonable approxima- 
tion of the utilitarian value, in terms of 
wages, of services rendered by the worker. 



138 Fifty Lessons on Utilitarian Economics 

We found that the individual worker's 
share in production, considered as a unit, 
but representative of a group of like units, 
was only a fraction of the total sum of en- 
ergy expended in the production of any 
given article. By the same reasoning we 
will reach a similar conclusion in regard 
to Capital. 

Let us, if we can, make this point clear: 
We will take a man and a saw in the lum- 
ber industry. The man is a labor unit, rep- 
resentative of a group of like units, and the 
saw is a capital unit, representative of a 
number of like units. Each of these units 
contribute only a fraction of the energy 
necessary to the production of lumber. This 
rule, applied to each group of labor units 
and capital units in the lumber industry, 
is the basis upon which we determine the 
utilitarian value of the services each group 
of units performs. 

Now let us consider some of the capital 
elements absolutely necessary in the pro- 
cesses of production. We must have raw 
materials and the means of procuring and 
assembling these materials. We must have 
transportation facilities — ^tracks, engines, 
cars — and we must have buildings in which 
to work and houses in which to live. We 
must have food supplies, fuel and other in- 



From the School of Utilitarian Economics 139 

dispensable things. We must have ma- 
chinery. All these things require a cash 
outlay in advance of a cash income, for 
these things must be provided before we 
make or market anything. 

Out of what fund are we to provide these 
preliminary essentials and pay for this 
preliminary labor? 

There are only two funds upon which 
we can draw: One of them represents the 
accumulated products of labor we inherit 
from Yesterday, and may be money, or col- 
laterals convertible into money; the other 
is the credit fund, which means that we 
must borrow the money we need, and 
thus, theoretically, if not actually, hypothe- 
cate prospective income from the plant. 
In the first place we would be using 
our own money or other property, for 
which we would have a fair legal and moral 
right to make a reasonable charge; and in 
the second place we would be using the 
money or other property of others, for 
which they would have a fair legal and 
moral right to make a reasonable charge. 

The tiext problem confronting capital in 
the processes of production is to market 
what is produced. The market must be 
found. The finished products must be sent 



140 Fifty Lessons on Utilitarian Economics 

to the market. Here again we are con- 
fronted by the necessity of cash expendi- 
tures in advance usually of any cash in- 
come. 

All these contributions to the processes 
of production must be made by Capital; 
and they depend upon property already ac- 
cumulated, or upon credits based upon such 
property or extended in anticipation of 
prospective income. 

Here we have considered only some of 
the simplest things Capital must do before 
the processes of production are to begin in 
any given plant. Yet even in this simple' 
setting we find many complexities, many 
kinds of materials, woods and metals in all 
stages of manufacture, and in many forms, 
ranging from rough timbers to the most 
highly finished products in woodcraft, and 
from nails and simple steel rods to hinges 
and locks, and the delicate parts of power- 
ful engines in the domain of metals^ — all 
of them capital units, and some of them 
representing investments made many years 
before. 

The workers who made these things were 
paid for making them WHEN THEY 
MADE THEM. 

Capital, in one form or another, and in 



From the School of Utilitarian Economics 141 

one place or another, has carried, without 
final reward up to this stage, the cost of 
producing these things; for labor, at each 
stage in the process of production, has been 
paid for the services rendered, and paid, 
too, out of accumulated assets which form 
part of our capital fund. 

Capital is never rid of the cost burden 
incident to the production of an article un- 
til the article is passed to the final user 
of it. And even then, as a capital asset 
in the hands of the final owner, it still 
stands, in utilitarian economics, as the rep- 
resentative of what it cost to produce it 
and place it in its final setting. 

In the very nature of things, despite 
popular opinions to the contrary, Capital is 
never adequately compensated for the work 
it does in modern society. It cannot be 
otherwise; for if we should pay in full, 
on the basis of actual benefit, the debt we 
owe for what we have and what we are, it 
would empty Today's treasury and still 
leave the larger part of Yesterday's obliga- 
tion unliquidated. The obligation is no 
mere chimera. It is very real. But we 
shall not have to pay it. Nobody exacts it. 
Most of the men and women who bequeath- 
ed us these heritages, these tools, these 



142 Fifty Lessons on Utilitarian Economics 



I 



machines, these conveniences and comforts, 
all these things that make up our stock of 
useful capital, are gone, and we may con- 
tinue to use them without fear of interrup- 
tion or foreclosure. Nevertheless a very 
solemn and sacred duty rests with us. 

We must use rightly and for right pur- 
poses the things we have; and we must 
also be as thoughtful of the men and women 
who are to come after we are gone as the 
men and women of Yesterday have been 
of us. 

Any consideration of the functions of 
Capital in productive processes would be 
incomplete if it did not include all the 
agencies used in transporting both raw ma- 
terials and finished products. We must 
have tramways, railroads, steamboats, 
ships, barges, and vehicles of many kinds. 
Besides in the procuring and assembling of 
raw materials, and in marketing and dis- 
tributing the finished products, other lines 
of communication, the telephone, the tele- 
graph, the cable and the wireless must play 
some part; and all these things are a part 
of the capital we use to further and facili- 
tate the productive energies of the country. 

Capital is a prime factor in production, 



From the School of Utilitarian Economics 143 

and while it requires the intelligence and 
skill of the worker to energize it and keep 
it in motion, its functions nevertheless are 
distinctive, and the utilitarian value of its 
services should be taken into the reckoning 
when we come to distribute the benefits of 
our productive efforts. 



144 Fifty Lessons on Utilitarian Economics 



The Thinker's Share In Production 



Tools, Machines and Other Appliances in Part Products 
of Inventors — Industrial Captains, Financiers and Pro- 
moters as Contributors to Production — Workers Who Think 
as They Work Add Most to Productive Energies. Also 
Further Labor's Interest and Progress. 

Lesson No. 26 

If we should attempt here even a meager 
outline of what the Thinker has contribut- 
ed to the processes of production, we would 
have to traverse the whole field of inven- 
tion, review the history of practically all 
of our sciences, and record a long succes- 
sion of improvements in mechanical appli- 
ances, and in industrial and business meth- 
ods, reaching back into centuries very re- 
mote from our own time. 

Forerunning every tool we have, and 
every machine of little or large importance, 
and every device of every kind and char- 
acter now used in productive processes, 
there was somewhere in some thinker's 
mind a dim outline of the thing that was 
finally to assume useful form. 

Thought is the great creative force in 
mechanics, as it is in every other sphere of 
usefulness. The steam engine and the cot- 



From the School of Utilitarian Economics 145 

ton gin, like the saw and the axe, the tele- 
phone and the phonograph, the ox-cart and 
the flying machine, the shuttle and the 
lathe, had their real beginning in the mind 
of the thinker. 

But we are not so much concerned here 
with what thinkers among our great in- 
ventors have contributed and still contrib- 
ute to production as we are with what is 
contributed by thinkers of another type and 
in different spheres. 

! Our mighty captains of industry, our 
great financiers, great organizers of capi- 
tal, and daring promoters who have ven- 
tured into new fields of exploitation are 
also among thinkers who have contributed 
enormously toward an increase in our pro- 
ductive energies. 

I The men who established the chartered 
companies in America loosened energies 
destined to find expression in that intense 
and wonderful industrial system which has 
tnade America one of the richest and most 
powerful countries of the world. The irony 
3f fate may have deprived some of these 
men of material reward; but surely they 
cannot be denied a place among thinkers 
who have contributed greatly to the pro- 
cesses of production, and, therefore, to the 



146 Fi^y Lessons on Utilitarian Economics 

wealth, well being and happiness of man- 
kind. 

But if we wish to find the thinkers who 
have contributed^ and still contribute, most 
to productive processes, we will find them 
among the sober, thrifty, thoughtful work- 
ers who keep the wheels of industry going, 
and (who have enabled us to establish new 
high standards of service and efficiency 
and sense still more alluring possibilities in 
the industrial life of the nation. 

Bessemer, the English engineer, made a 
great contribution to modern production 
when he found a process for making steel 
by taking carbon out of molten iron by thai 
air-blast. But we would not have realized 
the full benefit of Bessemer's discovery ex- 
cept for workers who think while they work 
in our great steel plants and in allied in- 
dustries. So, too the inventor of the steam 
engine made no small contribution to pro- 
ductive processes; but his work is small in 
comparison with the efforts of thoughtful 
stokers, who, by thinking as they stoke, con- 
trive to get the greatest possible number of 
units of heat out of a given quantity of 
coal. And so it is in every branch of our 
modern industrial life. 

The man who thinks as he works travels 



From the School of Utilitarian Economics 147 

faster and further than the man who does 
not think. 

Whatever progress the worker has made 
in efforts to improve his condition, increase 
his wages, and advance his general in- 
terests, is due to the thoughtful worker — 
the worker who, being thoughtful of self 
and eager to advance his own interests by 
increasing his own efficiency, has also been 
thoughtful of his fellows, his associates in 
the plant and the managers and owners of 
the plant. In the thoughtful worker we so 
frequently meet in industry, we meet again 
the Maximum Man discussed in an earlier 
lesson ; and usually, if we follow his course, 
we will find him not only a leader in the 
group to which he belongs, but a citizen of 
very sterling worth and recognized in- 
tegrity in all the relations of life. 

If more men would think as they work, 
more men would succeed. 

Work is drudgery only to the man who 
does not think as he works. 

There is no pleasure, no profit in thought- 
less labor. 

I When we put our mind on what we do, 
whether the task is little or large, a new, 
cheerful light shines on our efforts, and our 
energies glow and quicken under the stim- 



148 Fifty Lessons on Utilitarian Economics | 

ulating influences of a desire to do oui 
best. 

What we are discussing here is construc' 
tive thinking on the part of the worker i 
thinking that will lead the worker out oi' 
the slovenly and worst way of doing a: 
thing into the best way of doing it; thinknl 
ing that will eliminate useless movementsi 
and a waste of energy; thinking that short-] 
ens the distance between initial processes\ 
and final processes in production ; thinking 
that makes the burden of each day lighter 
than the burden of the day before; think-! 
ing that puts into each instant of time and 
into every ounce of energy the best of the\ 
worker^ s skill and talent, thus enabling him 
to play, not the irksome, gloomy, unhappy 
part of a drudge, but a man's past in his 
chosen sphere erf activity. 

There is good and bad thinking in indus- 
try, as there is in politics, in philosophy 
and economics; straight thinking and crook- y. 
ed thinking, constructive thinking and de-l 
structive thinking; and it is not difficult to 
find the line of demarcation between the 
jone kind of thinking and the other, for it 
will be shown, not only in the manner of 
the day's performance, but also in the sum 
of the day's output. 

Destructive thinking destroys the work- 



From the School of Utilitarian Economics 149 

er. It destroys the job. Giving less in 
service is not the way to get more in wages. 
Workers who think constructively, and, by 
thinking, seek to increase the sum of what 
they contribute to productive processes, rise 
more rapidly in the wage scale and go 
much further in industry than the saboter 
who thinks destructively or the shiftless 
slacker who thinks not at all 

It is easier for the worker, interested 
and enmeshed in his labors, to think his 
way to success, than it is for him, in noisy 
rostrums or elsewhere, to talk and heckle 
his way to success. 

There is a tribute to be paid the quiet 
thinker in industry, the man who loves his 
labor and smiles as he toils, and who lets 
the best there is in him flow into whatever 
he does, for, in the final reckoning, much 
of the credit for our achievements in indus- 
try must be set down to men of his type. 



150 Fifty Lessons on Utilitarian Economics 



The Muscle's Share In Production 



Marked Decrease in Part Mere Physical Strength Plays 
in Industrial Operations — Mind, Machinery and Improved 
Methods Replace Muscle. 

Lesson No. 27 

There is still work in industry for muscle 
to do ; but what we have said of the think- 
er's share in production makes it plain that 
muscle now is of less importance than it 
once was in productive processes. 

Mind, {machines and new methods in 
practically all spheres of industrial en- 
deavor have narrowed the usefulness of 
muscle as a factor in modern economic life. 

We do not mean to undervalue the part 
physical strength per se must play in mod- 
ern industrial operations. What we are 
seeking to emphasize is that the strong arm 
and the strong back which once bore so 
much of the weight of industrial operations 
are not now prime requisites, for they have 
been replaced by machines and other appli- 
ances of vastly increased utilitarian value. 
Of course there are still many kinds of 
labor to be performed by men who are 
physically strong; but, comparatively 
speaking, the spheres in which we depend 



From the School of Utilitarian Economics 151 

exclusively upon human muscle are few. 
We must still rely, to be sure, upon strong, 
well men, men who are physically sound 
and fit, to carry on our great industrial 
enterprises; there are still things in indus- 
try machines cannot do for us; but, in the 
main, we have grown out of the old condi- 
tion when a man could convince us of his 
fitness and efficiency as a workman by 
rolling up his sleeves and crooking his arm 
at the elbow. 

It is not enough now for a man to be 
physically well and strong; we want him to 
be well and right above the shoulders also. 
We want his mind to be sound, clear, un- 
weakened and unconf used by erroneous con- 
ceptions of the part he is to play in indus- 
try, and by wholly false notions as to what 
he should give, and what he should receive 
in return for it. 

In our economy the muscle man is as 
archaic as the cave Trwm, We have passed 
out of the muscle period into the period of 
mind mastery, and, in consequence, have 
sloughed many of the galling hardships 
that once ground workers in industry down 
to low and unhappy levels. 

The decline of the muscle in industry be- 
gan when workers in industry began to 
think, and with the early appearance of 



152 Fifty Lessons on Utilitarian Economics 

machines and other mechanical devices, and 
a steady increase in the number and kind 
of these helpful aids, muscle has become a 
minor and subordinate factor in our pro- 
ductive processes. Even many of our so- 
called unskilled workmen find their muscles 
now relieved of burdens they once carried, 
for these, too, in the performance of their 
duties call mechanical appliances and me- 
chanical power to their assistance, and thus 
frequently find it is easier to do ten men's 
work than it used to be to do one man's. 

While the utilitarian value of this revolu- 
tion in our economic life is not yet fully 
recognized by many workers, who still per- 
sist in thinking in terms of the muscle age, 
there is yet among workers a growing ten- 
dency to appreciate the significance of the 
change, and, in many instances, a hopeful 
disposition to use, up to the maximum of 
its value, the new and alluring opportunity 
thus afforded. In a word many thoughtful 
workers realize that we have passed in in- 
dustry from the supremacy of muscle to the 
supremacy^ of mind, and this fact is full of 
fine meaning for the future of mankind, 
for it is a certain forerunner of economic 
stability, economic peace and the happiness 
for which we are striving in these economic 
studies. 



From the School of Utilitarian Economics 153 



Unfinished Things 



Definition and Function of Things in Intermediate Pro- 
cesses of Production — Always Burden on Capital — Labor 
Cost Liquidated When Labor Performed — Capital Burden 
Heavy and Lengthy. 

Lesson No. 28 

Unfinished things represent intermediate 
stages in the processes of production. Cloth, 
for instance, does not assume the form of a 
finished product until it has been converted 
into a suit of clothes, a dress or into other 
useful shape. In the case of cloth, too, 
there are other intermediate stages, and all 
of these are important, from an economic 
point of view, for the reason that they rep- 
resent the value of important factors in 
productive processes. Both capital and la- 
bor have contributed to these processes ; but 
there is this important fact to be considered 
in connection with any unfinished thing 
among our industrial assets: 

At every intermediate stage in the pro- 
cesses of production the labor cost is liqui- 
dated; but the unfinished thing remains a 
burden upon capital, not only during all 
the stages of its unfinished state, but fre- 
quently for a considerable length of time 



154 Fifty Lessons on Utilitarian Economics 






after it has become a finished product 
Take cloth again as an illustration: If it 
is made of cotton, the men who planted, 
hoed, plowed, picked, ginned and baled the 
cotton are paid for the service they render 
when they render it. Workers in mills who 
convert cotton into cloth are paid for their 
service when it is rendered. Thus the cot- 
ton grower carries the cost burden of cot- 
ton from the time of planting the seeds to 
the time when the cotton is sold in the mar- 
ket; another group of men carry the bur- 
den until the cotton is sold to the mill ; the 
mill carries the burden until the cloth is 
sold to the merchant or the tailor, and the 
merchant or tailor must carry it until, con- 
verted into wearable or other useful form, 
it is sold to the final user of it. Capital, 
therefore, does not get final release from 
the cost involved in these productive pro- 
cesses until the finished product has passed 
finally into the hands of the consumer. 

Not enough attention has been paid to 
this vital fact in our economic life. We 
speak of it as a vital fact advisedly; for 
this burden on capital, evident everywhere 
in vast quantities, not only of unfinished 
things not yet in a marketable condition, 
but of a vast quantity of finished things 
also not yet sold, is frequently continued 



From the School of Utilitarian Economics 155 

through a long series of years, and while 
the burden may be shifted from one group 
of persons to another, it nevertheless re- 
mains a charge against the capital fund. 
In different language, these finished and 
unfinished things not yet sold to final con- 
sumers represent invested money upon 
which no return has been made, and none 
can be made, in a final sense, until the 
whole account is liquidated by a sale to the 
consumer. 

Labor has been paid; but capital must 
wait, some times for years, for its return 
on investments in these productive pro- 
cesses. 

What is the total value of the unfinished 
things we usually carry as a necessary part 
of our capital stock? How long, on an 
average, are these things carried before 
they are turned into finished things? What 
is the total value of these finished things^ 
and how long, on an average, do we carry 
them? 

These questions are asked merely for 
their suggestive value. They are import- 
ant questions, for they touch upon im- 
portant phases of an economic life, and 
have a very intimate bearing upon some of 
our industrial problems, as we shall see in 
subsequent studies. 



156 Fifty Lessons on Utilitarian Economics 

Both the finished and unfinished things 
here considered are things not now in use, 
and therefore are not to be confused with 
the things that already have passed to the 
final stages of production and distribution. 

When an article of use is bought by the 
person who is to use it, all antecedent cost 
incident to its production and distribution, 
including both labor and capital costs, is 
finally wiped out, in theory at least, and 
these parts of the economic account are 
closed. But so long as the article remains 
either unfinished, or finished, but unsold to 
the consumer, the obligation is unliqudated 
and the account is open, except as to the 
labor cost part of it which, as we have seen, 
is satisfied when the labor is performed. 



From the School of Utilitarian Economics 157 



Finished Things 



Final Processes in Production — Function of Finished 
Things — Things Made of Finished and Unfinished Things- 
Final Liquidation in Sale to User. 

Lesson No. 29 

The desk on which this is written is a 
finished product It is made of a combina- 
tion of finished and unfinished things. The 
wood in it did not reach the finished stage 
in productive processes until it assumed its 
present form. True, it had gone through 
certain processes we use to produce what 
we call finished material But this finished 
material had no utilitarian value, except in 
a possible and potential sense, until it was 
used to make the desk. 

Stains used to color the desk and oils 
used to polish it represent a combination 
of finished products. The screws used to 
hold the parts of the desk together may 
also be regarded as finished things. 

The economic history of this desk is not 
unlike the economic history of any finished 
product we might consider after it has 
passed finally into the user's hands. It is 
a long, interesting history, for it goes back 



158 Fifty Lessons on Utilitarian Economics 

into the forests where we got the wood, into 
the mines where we got the metals to make, 
not only the screws and nails, locks and 
handles for cover and drawers, but the 
tools also used in making the desk and 
everything that is a part of the desk; it 
would be a big part of the history of chem- 
istry, and would also show us much of the 
history of what we know about mixing and 
using colors. 

But here we have a finished product at 
the end of a long journey. All the expense 
incident to the production of the desk, or 
any part or material used in its produc- 
tion, has been liquidated, and the desk has 
taken its place among the capital assets of 
its owner and user. 

These statements apply with equal force 
to all things which have reached the end of 
their economic journey, so far as the pro- 
cesses of production and distribution are 
concerned, and are being put to the uses 
they were designed to answer in our econ- 
omy. We have many such things. They 
are, in part, the things with which we do 
the world's work and represent a big part 
tof the world's wealth. We have already 
discussed the part finished things play in 
the production and distribution of the 
things we need for sustenance and con- 



From the School of Utilitarian Economics 159 

venience in modern life. We find them in 
our work shops, in factories and on farms, 

I in mines and in the marts of trade, on land 
and sea, in the air and under the earth- — 
everywhere we turn where men are en- 
gaged in useful pursuits we find some of 
these finished things. And we find many 
of them, too, in our great storehouses and 
on the shelves of our merchants. 

II Whether any particular finished thing is 
active or inactive, whether it is in actual 
use or is awaiting final placement, it is a 
potential factor in our economic life, for, 
once finished and ready for use, it becomes 
an addition to our vast stock of marketable 
and usable assets, and, normally, exercises 
an influence in determining price levels and 
wage scales in those spheres of industry 
and trade connected with its production, 
distribution and sale. If, for instance, 
there are on the market a largely increased 
number of finished things of a certain kind, 
with no proportionate increase in the de- 
mand for them, we face a situation which 
may slacken productive energies and tend 
to lower wages in certain industries en- 
gaged in the making of these things, while 
at the same time we may note a downward 
trend of prices because the market is over- 
stocked. 



160 Fifty Lessons on Utilitarian Economics 

When we come to consider prices we shall 
make a close examination of this economic 
function of finished things, for here we are 
concerned chiefly in a suggestive statement 
which has to do only with the nature and 
character of finished products, and the part 
they play in our productive energies when 
in active use, as in the case of tools and 
machinery, and when not in active use, as 
in the case of finished things unsold and not 
in use except as capital assets which may 
become the basis of credit extensions and 
answer other indirect uses in our economy. 



LESSONS No. 

THIRTY, THIRTY-ONE, 

THIRTY-TWO, THIRTY-THREE, 

THIRTY-FOUR, THIRTY-FIVE, 

THIRTY-SIX, and THIRTY-SEVEN 



Copyright 1921 



From the School of Utilitarian Economics l&l 



What Is Wealth? 



An Outline of Utilitarian Definition of Term — Wealth 
Does Not Consist of Mere Ownership — Use at Base of All 
Economic Values — Solomon's View of Wealth, and Benefits 
Enjoyed 'by Owners and Users — Wealth in Work — Some 
Examples. 

Lesson No. 30 

In both its legal and its popular mean- 
ing, wealth is a word of relative signifi- 
cance. Usually the popular idea of the 
man of wealth is the man who owns most, 
in a material sense, in the community in 
which he lives, and, per contra, the poorest 
man is the man who owns least Actually 
our poorest man may be our richest, and 
our supposedly richest, our poorest. 

What is wealth? It is not the mere own^ 
ership of material properties. Nor is it 
in the mere possession of material assets 
of value. It is in the use we make of what 
we have, whether as owner, possessor or 
user. 

One man may own a thing, another may 
possess it, in a legal and moral sense ; and 
still another may use it. Take our tele- 
phone: They are owned by one group of 
persons, legally possessed by another, and 
used by a large number of persons not to 



162 Fifty Lessons on Utilitarian Economics 

be considered as either owners or posses- 
sors, in a technical sense. Who derives the 
greatest benefit from telephones? Obvious- 
ly the persons who use them. Indeed, if it 
were possible to compute in terms of money 
the actual value of telephones to these dif- 
ferent groups of persons, the value of this 
instrument to persons who use it in ordi- 
nary business relations would be so great 
in comparison with its value to its owners 
that even the average thoughtful person 
would be surprised by the bare statement 
of fact. 

In view of such obvious facts as these it 
is plain enough that wealth is not the mere 
ownership or possession of more things or 
more m^oney than is owned or possessed by 
other persons. A man is not necessarily 
wealthy merely because he owns and de- 
rives an income from what another man 
uses. 

Sometimes we seem not to have learned 
a great deal about some things during the 
march of centuries between Solomon's time 
and our own. "Where much is," Solomon 
said, "there are many to consume it, and 
what hath ;the owner but the right of it 
with his eyes?" Of "great riches" Bacon 
said substantially the same thing; "there 
is a custody of them," he said, "or a fame 



From the School of Utilitarian Economics 163 

of them, but no solid use to the owner." 
In view of some of the abnormal things of 
our own time, and certain extravagancies 
of thought these things have excited, not 
only among the masses, but also among 
men and women who pretend positions of 
leadership by coarsely pandering to mass 
prejudices, we might be inclined to modify, 
in some slight degree, the dicta of both Sol- 
omon and Bacon; but such modification as 
we might make would not impair the fun- 
damental wisdom and profound philosophic 
significance of the sayings of these wise 
men, and the unescapable conclusion reach- 
ed by them that a man is not wealthy 
merely because he owns many things that 
are in use. 

No man is wealthy solely because of what 
he owns. 

Indeed a man might have all the gold 
that has been mined and coined from Ophir 
to the Rand and still be among the poorest 
of the poor. If we strip him of his inclina- 
tion and his capacity to organize and es- 
tablish new enterprises, and direct the en- 
ergies of men; if we shut him off from all 
the buoyant excitements of an industrial 
and financial career; if we tell him there 
is nothing useful for him to do, no useful 
demand for his talent, his services or his 



164 Fiity Lessons on Utilitarian Economics 

gold, he would become very poor indeed, 
and would be as helpless and unhappy as 
if entombed in a windowless cell made of 
his gold. 

There is no real wealth in the ownership 
of idle properties. 

Real wealth consists in the use of things, 
in making them reproduce themselves and 
pay their own way by taking care of a 
fair proportionate share of the day's eco- 
nomic burdens. 

Much of the quarrel with wealth grows 
out of a total misunderstanding of the na- 
ture and function of wealth. 

A loaf of bread and a pound of meat, a 
suit of clothes and a pair of shoes normally 
mean as much to one man as to another. 
Nor can the richest of our factory owners 
fill more than one man^s job in his plant. 

The trouble with too many of our unripe 
economists is that they assume that wealth 
is something exclusive, something that is in 
the hands of the few for the sole benefit of 
the few, instead of regarding it as some- 
thing diffusive, something that is used to 
energize and benefit the whole mass of so- 
ciety. 

We need not go beyond the simple mean- 
ing of the word to get its real significance 
in utilitarian economics. Wealth means 



From, the School of Utilitarian Economics 165 

weal. Weal means well. To be wealthy, 
therefore, means to be doing well; and if it 
may be said of a man that he is doing well, 
it is safe to assume that there is good for 
others in what he /does. So, too, we speak 
of the commonweal when he discuss the 
good, or the well being of all, and we speak 
of the state as the commonwealth for a like 
reason. 

No man has wealth except in his work. 

Wealth is in what we do rather than in 
what we have. And if we do much, most 
of what we do will be for others, for we are 
but one among many; and besides, taking 
us man at a time, there are not many 
things, among many very necessary things, 
that we can do for ourselves. In economics, 
therefore, no less than in philosophy, the 
wealthiest man, in any period, is he who 
does most for mankind. 



From the School of Utilitarian Economics 167 



Users of Wealth 

Ownership Less Important Than Use of Wealth — Real 
Value of All Wealth in Its Use — Users Derive Larger 
Benefit Than Owners — Ownership Is Only Nominal — Simple 
Examples Illustrate Relative Benefits of Owners and Users 
of Wealth. 

Lesson No. 31 

The ownership of wealth or capital is of 
less consequence than the use of wealth. 
Ownership at best is nominal. Use is ac- 
tual, complete, absolute. Ownership is not 
always profitable. But the iiser of capital 
always reaps a profit out of it, and the 
profit is large or small, according to the 
degree of intelligence and efficiency dis- 
played by the user. 

Wealth has no value except in use. 

Wealth as a rule, bestows larger benefits 
upon its users than upon its owners. 

Nor is it possible to deprive the user of 
wealth of these benefits without hurt to 
the owners. For when the use of wealth 
ceases to be of benefit to users, use ceases^ 
and the wealth becomes idle; and idle 
wealth is of no value to its owner. 

We are frequently reminded that a large 
per cent of the wealth of America is owned 
by a small per cent of the people of the 



1 



168 Fifty Lessons on Utilitarian Economics 

country. From an economic standpoint, 
the fact has no very vital significance if v^e 
are correct in assuming that wealth has 
no value except in use. 

Take a group of men who own a big in- 
dustrial plant. If the plant is idle, that is, 
if it is not in use, it is of no value to its 
owners. Nor is it of any value to workers 
who could operate it. 

It becomes of value to owners and work- 
ers only when put to use. And out of this 
use, whether profitable or unprofitable, in 
final terms, the workers, who are the users 
of the plant, derive a greater proportionate 
benefit from its operation than its owners 
derive. 

More than fifty-five cents out of every 
dollar earned by American railroads in 
1919 went to the men and women who work- 
ed for the railroads, the remainder going 
into taxes, upkeep, betterments, extensions 
and so forth, with the result that the 700,- 
000 persons who nominally own the rail- 
roads derived practically no benefit from 
ownership. 

Workers are the first users of capital, 
and therefore derive the first benefits from 
its use. 

Suppose we take a bale of cotton and 
finally complete the processes of production 



From the School of Utilitarian Economics 169 

by converting the material into socks. Be- 
tween the time when the planter sowed the 
seed, and the time when the salesman sold 
the socks, who has derived most benefit 
from this product? Its nominal owners, 
or its users, at the different stages in the 
processes of production. When we have 
paid the planter, the cultivator, the picker, 
the ginner, the spinner, the weaver; and 
the workers who have helped to transport 
the material from place to place; and the 
men who have made and operated the ma- 
chinery used in the processes of produc- 
tion ; and the men who made the dyes used 
in coloring the socks, the amount the nom- 
inal owners would get out of this bale of 
cotton Vv^ould be small in comparison with 
the amount the users of capital, that is, the 
workers, would get out of it. 

The larger part of the value of the socks 
we have made from our bale of cotton was 
contributed by labor, and the larger part 
of this value has been returned to labor. 

Or suppose we take a pair of socks made 
of wool. The wearer of the socks, the 
final customer, paid $1.00 for them. The 
grower of the wool got only a few cents 
for the quantity of wool used in making the 
socks. Why this difference between what 



170 Fifty Lessons on Utilitarian Economics 

the grower gets and what the consumer 
pays for the wool in a pair of socks? 

The constant and ignorant assumption 
is that the difference between the wool 
grower's few cents for his wool, and the 
$1.00 the consumer pays for the socks, rep- 
resents a profit which flows into the pockets 
of the nominal owners of the material out 
of which the socks are made. Yet this m- 
creased value in the price of the wool has 
been contributed by labor and the larger 
part of it returned to labor at different 
stages in the processes of producing the 
socks. 

Here again the users of capital, the work- 
ers, and not the nominal oivners, are capi- 
tal's chief beneficiaries. 

So far we have spoken only of workers 
as users of capital or wealth, and of the im- 
mediate and direct pecuniary benefit they 
derive from such use. 

Workers derive other benefits, not less 
important, from the use of capital also. 

No intelligent man can use a tool or a 
machine of any kind without getting some- 
thing more than his wage out of it. The 
very use of the thing, however common and 
simple it may be, becomes a part of his 
education, and, by just so much, increases 



From the School of Utilitarian Economics 171 

his personal capacity and his efficiency as 
a workman. 

When we know how to use well even the 
simplest of our tools, we have achieved in- 
dependence; and if we master completely 
the complex mechanism of one of the great 
machines used in our industrial plants, we 
really pass into the ranks of the rich and 
powerful. Indeed we miss utterly the larg- 
er and better meaning of aristocracy if we 
fail to include in this class workers of talent 
who achieve complete mastery over the 
weapons they use in industry, for these 
workers, rising above the dead level of 
mediocrity and drudgery in the use of tools, 
win marked distinction by the cleverness 
and brilliance they put into their efforts, 
and may fairly be regarded as real aristo- 
crats. 

Moreover, it not infrequently happens 
that mere contact with a tool or a machine 
will, in the worker's case, loosen useful 
mental energies, and lead to inventions of 
great value to industry, or to changes and 
improvements in tools or machines that will 
result in new economies of vast benefit alike 
to workers and employers. 

We speak of the ownership of wealth or 
capital as nominal We have in mind, not 
only the usual hazards, such as fire, or oth- 



172 Fifty Lessons on Utilitarian Economics 

er destructive agencies, business reverses 
due to periodic depressions or bad manage- 
ment, but the sovereign rights of the state, 
and of minor political divisions ; for always 
ownership is subject to the will and pleas- 
ure of the government. 

In the final analysis, the title to all prop- 
erty, even in a democracy of the American 
type, is in the sovereign, which is the state, 
and it can be taken at any time for pub- 
lic use, regardless of the use to which its 
nominal owners may be putting it in 
spheres of private business activity. The 
only condition imposed upon the sovereign 
by our jurisprudence in such cases is that 
nominal owners must be duly compensated 
by the state. 

If an industrial plant, or a business es- 
tablishment of any kind or a home, is on 
land needed to perfect a link in a necessary 
public highway, the government can con- 
demn it, pay for it, and take it. 

Such properties may also be condemned 
and taken over for quasi-public use, such 
as for railroad or other public service 
rights-of-way. 

Workers are not compelled to share in 
any of the losses due to these changes, ex- 
cept perhaps such losses as may result from 
a temporary lack of employment. 



From the School of Utilitarian Economics 173 

When we divide up the Dollar that is 
used in industry, we find that the workers 
in industry get the biggest part of it. 

Workers use tools, machinery and other 
equipment in industry that belong to other 
men, and have been contributed by the la- 
bor of other men. 

Workers in industry frequently use the 
credit and get their living out of the credit 
of the nominal owners of the plant in which 
they are employed. 

Workers thus get the benefit of the tal- 
ent, resourcefulness and physical capital of 
men who promote industries and build and 
operate industrial plants, and this benefit 
is proportionately greater as a rule than 
the benefit derived by the owners of the 
capital. 

The fact of the matter is that the bulk 
of the value which arises from the use of 
Capital finds its way into the pockets of the 
worker. 

Obviously, in such circumstances, mere 
ownership of the Capital used in industry 
is of less importance, from the worker's 
standpoint, than the use the worker is to 
make of it. 

The value of all Capital, whether money, 
muscle, mind, machinery or materials. 



174 Fifty Lessons on Utilitarian Economics 

whether fixed or circulating, tangible or in- 
tangible, is in its use. 

We do not own money. 

We use money, and the only value money 
has is in its use. We are speaking now 
from the standpoint of utilitarian econom- 
ics, from the standpoint of the great prin- 
ciple of utility in our industrial life and 
without regard to the forced and fictional 
refinements of economists, old and new, 
who too often have clouded truth by flights 
into realms of pure speculation. We must 
draw the line sharply between the fictional 
and the real, between the theoretical and 
the practical, for our present problems in 
America are intensely real, intensely prac- 
tical, and in dealing with them no matter 
how many rosy and alluring refinements 
may loom to tempt us, we must keep con- 
stantly in mind the utilitarian aspect of all 
values. 

The value of things is in the use we make 
of things. This use is sometimes seemingly 
passive. 

We stroll into an Art Museum and pause 
to gaze upon a great painting. It is mo- 
tionless, silent; yet it speaks to us, stirs 
sleeping sentiments within us, spiritualizes 
our emotions; and when we leave it, though 
we never touch it, we take some subtle and 



From the School of Utilitarian Economics 175 

sublime part of it back into our prosaic 
world, where by sheer inspirational vigor, 
it may loosen useful energies and give us a 
finer taste for the work we are fit to do. 

The value of the artist's painting, great- 
er than mere ownership, is in the use we 
have made of it. We have rubbed our own 
soul against the painter's soul, and have 
struck off sparks of inspiration to cheer 
and strengthen us as we go about our little 
business. 

How often we get the same quality of 
inspiration from the clever artisan ! 

If we could only shoe a horse as well as 
our favorite smithy can do it ; or fell a tree 
as quickly and as accurately as a woods- 
man we know; or hammer a small lump of 
gold into a big, shining and shapely vase, 
like an old craftsman of our acquaintance, 
— if we could only do any one of a thou- 
sand things as well as they are done by 
men we know, how clever, how fortunate, 
how happy we would be ! 

The vakoe of these examples also is in 
the use we make of them. 

If an understanding of utilitarian values 
will help us to get rid of the confusing and 
pernicious error of laying too much stress 



176 Fifty Lessons on Utilitarian Economics 

on the importance of the ownership of 
things, and not enough on the importance 
of the iise of things, many of our economic 
problems will become simpler, clearer and 
very much less vexing, and final solution 
will be easier. 



From the School of Utilitarian Economics 177 



Producers of Wealth 



Many Persons and Energies Produce Single Article of 
Use — Tivo Old Theories of Source of Wealth Not Applicable 
Noiv — Labor and Soil No Factors in Wealth Production — 
Reproductive Wealth — Other Neio Factors in Wealth Crea- 
tion. 

Lesson No. 32 

While we are considering the producers 
of wealth it may be well for the student to 
recall what was said in a more general way 
in the lesson devoted to a study of the pro- 
ducer, in which we sought to emphasize the 
fact that any article of use and value is 
not the product of one person, but the prod- 
uct of many persons. All our properties, 
fixed and circulating, tangible and intangi- 
ble, everything that we group under the 
general name of wealth, represent, in the 
final analysis, the energies of many persons 
and the profitable use of many different 
kinds of talent. 

Before the time of Adam Smith the lead- 
ing economists, notably those of France, 
assumed and asserted that all wealth came 
from the soil. Adam Smith held that 
wealth is the product of labor. In the light 
of what we now know about the production 
and distribution of wealth, we are bound 



178 Fifty Lessons on Utilitarian Economics 

to reject both theories in so far as they 
seek to perpetuate the fundamental and 
mischevious economic error that wealth is 
exclusively the product either of the soil or 
of labor. Both labor and the soil are con- 
tributors to the production of wealth; we 
may go further and say they are necessary 
contributors; but it would be alike unsound 
and untruthful, economically, to say that 
either the one or the other, or that both, 
can lay exclusive claim to the processes that 
end in wealth produced. 

Much of our wealth, in part at least, 
reproduces itsdf; and for long ages before 
we learned to utilize things now classed 
among our prime assets, these reproductive 
processes had gone on without any sort of 
aid from human beings. In some of these 
cases, as, for instance, in the case of the 
great forests from which we get our tim- 
ber, the soil was a factor in productive 
processes, but not a more necessary factor 
than the wind, the rain and the sunshine. 
Our flowing streams, and other water 
courses, are assets of great value to com- 
merce and industry; while there is some 
connection between these assets and the 
soil, still it is not of a kind to justify the 
conclusion that the tremendous wealth of 
our water power and water commerce is 



From the School of Utilitarian Economics 179 

due exclusively to the soil. The same re- 
mark may be made of our fish industry 
which, up to a certain point at least, repro- 
duces itself. 

The point we are seeking to emphasize 
is that economists who regarded the soil as 
the exclusive source of all wealth were on 
unsafe ground, just as Adam Smith was 
on unsafe ground in regarding human la- 
bor as the exclusive source of all wealth. 

Wealth is the product of many forces, 
some of them natural, some of them me- 
chanical, some of them physical and some 
of them mental; and there are still other 
forces that contribute to the production of 
wealth which probably would not come un- 
der other of these heads. A farm in an 
isolated and inaccessible region is worth 
only a few thousand dollars. But let a 
railroad skirt it, and build a town near it, 
and in a short while it may be worth many 
thousands of dollars. A vast amount of 
our wealth has come into existence in this 
way. It is what our economists refer to as 
the unearned increment. 

Certain securities also frequently show a 
vast increase in value because of the de- 
velopment of a new and unexpected situa- 
tion which will cause a sharp increase in 
the demand for them. In a great many 



180 FiUy Lessons on Utilitarian Economics 

instances of this character the wealth of 
the nation is heavily increased by influ- g 
ences due almost exclusively to what may j 
be called mass psychology. A familiar il- 
lustration may be found in what happens 
in a period of excitement due to the discov- 
ery of a new oil field. While nearly always 
there are heavy losses in such periods, due 
to reckless buying on the part of the public, 
the net result, in an economic sense, is an 
increase in wealth, for established oil se- 
curities are worth more during and after 
these periods of excitement than they were 
before. The same rule will be found to 
operate in almost any substantial field of 
investment. 

Then, too, there is the dollar, in its own 
right as money, to be considered as a factor 
in wealth production. The dollar, in the 
hands of a man who knows how to make 
the dollar work in useful and profitable 
enterprise, will reproduce itself many times 
in the course of a year. Credit is also a 
big factor in wealth production, credit 
either in the simple form of one man's con- 
fidence in the business ability and personal 
integrity of another man, or in some other 
form. 

Of course in a great many of these in- 
stances we might, with propriety, reason 



From the School of Utilitarian Economics 181 

ipur way back to the soil, and back to la- 
bor; but in no instance would we be justi- 
fied in the assumption that either the soil 
or labor can be regarded as the exclusive 
source of the vast additions thus made to 
our national wealth. 

They may be factors. But they are 
never the exclusive factors in wealth pro- 
duction. On the contrary there is a great 
deal of wealth in America, and elsewhere 
in the world, which does not owe its ex- 
istence either to the soil or to labor, and it 
is answering a highly useful purpose in 
our economic life. 



From the School of Utilitarian Economics 183 



Natural Wealth 



What the Phrase Means in Utilitarian Economics — 
Made Up of Raw Materials and Raw Forces — When Wealth 
Ceases to Be Natural Wealth — Change Comes When Pro- 
ductive Processes Begin. 

Lesson No. 33 

What we mean by natural wealth re- 
quires no more than a simple statement; 
indeed from what we have said in preced- 
ing studies we think the student already 
has a reasonably correct understanding^ of 
the meaning of this phrase in utilitarian 
economics. 

But in order to obviate the possibility of 
misunderstanding we may recapitulate 
some of the elements of our natural wealth. 

Of course in an absolute sense all our 
wealth is natural wealth, for all that we 
have comes from nature's storehouse. But 
we have given new forms to many of the 
things with which nature has provided us. 

Our natural wealth is our raw materials 
and raw forces. 

Water is natural wealth; but when we 
use the power of flowing water to turn 
wheels, drive engines and to generate the 
electricity with which we move trains, en- 
ergize great industrial plants, and light 



184 Fifty Lessons on Utilitarian Economics 

our cities, we not only give to this wealth 
a new form and a new place in our econ- 
omy, but we vastly increase its utilitarian 
value. 

Wood or metal in the raw is natural 
wealth. The soil, too, in its virgin state, 
is natural wealth. 

Anything ceases to be natural wealth as 
sux^h when we apply the initial energies 
to the raw material in the processes of 
production. 

Thus, clay is natural wealth; but it 
ceases to be natural wealth when we put 
it into a brick mold. 

Anything finished, or at any stage of 
the processes to result in a finished prod- 
uct, has ceased to be a part of our natural 
wealth from the standpoint of utilitarian 
economics. 

Our great forests of standing timber, our 
unmined coal, ores and chemicals, our sup- 
plies of sea food, our wild game, our un- 
harnessed and unused water power, our 
uncultivated and unimproved land areas, 
the marble and granite of our hills, the oil 
in the veins of the earth, — these are among 
the many things to be included in the vast 
schedule of our natural wealth. 



From the School of Utilitarian Economics 185 

To, too, we might include our rivers, 
bays, estuaries, lake and other water 
courses which play a part in our industrial 
and commercial life, for all these things 
have either actual or potential utilitarian 
value. 



From the School of Utilitarian Economics 187 



Owners of Wealth 



Who Oivns the Wealth of America? — Small Stockholders 
in Big Concerns — Popular Errors Regarding Ownership — 
Importance of Small Owners of Wealth. 

Lesson No. 34 

Who owns the wealth of America? Con- 
trary to the popular belief the wealth of 
this country is not owned by a few men and 
women. When we come to examine the 
books of the great corporations of America, 
the railroad and street railway systems, 
light and power companies, oil companies, 
sugar refining companies, packing com- 
panies, and a vast variety of other organ- 
izations engaged in the production and dis- 
tribution of foods and other things neces- 
sary to the comfort and well being of the 
people, we will find, not thousands, but 
millions of persons among the actual own- 
ers of these enterprises. 

While many of these persons have only 
small holdings, some of them only a few 
thousand dollars, nevertheless they are 
among the owners of wealth in America. 
Not only so, but in some instances the total 
of these small holdings in the case of some 
of our biggest enterprises represents a 



188 Fifty Lessons on Utilitarian Economics 

heavy per cent of the total stock issued by 
the corporation. We never hear of these 
small stockholders for the reason that the 
investor nearly always is in the back- 
ground. He is not concerned in the actual 
management of the enterprise; he has mere- 
ly put his savings into it to shield himself 
and those dependent upon him against the 
possibilities of "the rainy day," and must 
perforce look to others actively engaged in 
the management of the enterprise to pro- 
tect him and his interests. 

Yet if we associate the name of Hill or 
Harriman with a railroad, or the name of 
Spreckles with a sugar enterprise, or tag 
Rockefeller's name to an oil enterprise, at 
once the unthinking public will conclude 
that the enterprise, whatever its nature, 
is in the hands of a few big men and is 
owned and operated exclusively in their 
interest. 

We have some very wealthy men and 
women in America, men and women of 
very great wealth, in an actual as well as 
in a nominal and potential sense. Yet if 
these men and women should pool their 
interests and combine all of their available 
and useable resources, they would have only 
a small fraction of the wealth of this coun- 
try and could finance and conduct only a 



From the School of Utilitarian Economics 189 

small per cent of the enterprises, big and 
little, in the United States. Indeed, if Am- 
erican industry and American commerce 
had to depend wholly and exclusively upon 
the useable resources of the few men and 
women who are supposed to own the bulk 
of American wealth, industry and com- 
merce would dwindle to alarmingly small 
proportions. As a fact out of these re- 
sources we could produce only a fraction 
of what we need for bare sustenance. 

It is only by pulling the vast army of 
small owners of wealth into the American 
investment field, and making profitable 
use of their savings, that we are able to 
meet the constantly increasing economic 
demands of the country. These demands 
include the demands of men and women for 
employment, demands for food, clothing, 
fuel and all other things necessary to our 
economic and social wellbeing. 

Any approximately complete list of the 
owners of wealth in America would be very 
long. It would be longer than our tax 
lists, for many persons own wealth that is 
not taxed or taxable. As a matter of fact 
most of us would be surprised at the com- 
paratively small number of persons to be 
regarded, under proper classification for 
economic purposes, non-owners of wealth. 



190 Fiity Lessons on Utilitarian Economics 

If a carpenter has no more than his kit 
of tools, the rancher no more than his acre, 
his mule and his plow; the oyster man no 
more than his tongs and his bottom; the 
woodsman no more than his saw and his 
axe; the spinster and the widow no more 
than what they have saved from meager 
earnings or small bequests — all these and 
many others of small possessions are never- 
theless among the owners of wealth, and a 
big part of the mighty total of America's 
wealth is made up of the small things that 
belong to our small owners of wealth. 



From the School of Utilitarian Economics 191 



Idle Wealth 



Heavy Tax Imposed J)y Idleness — What Is Meant by Idle 
Wealth — Waste Incident to Rapid Progress — Idle Men, Idle 
Machines, Idle Money — What Idleness of Six Million Work- 
ers Means — Strikes and Lockouts as Causes of Idleness — 
Waste Due to Idleness AvoidaMe. 

Lesson No. 35 

No tax, from an economic standpoint, is 
heavier than the tax imposed by idle wealth 
in America. The phrase idle wealth is 
comprehensive. Of course, in a certain 
qualified sense, as we have seen in a pre- 
ceding study devoted to certain aspects of 
wealth, the phrase idle wealth, from the 
standpoint of utilitarian economics, is a 
contradiction in terms, for wealth depends 
finally upon use. Hence what we say of 
idle wealth in this study will have reference 
to certain energies and certain properties 
fit to be used, but which, for one reason 
and another, or for no reason at all, are 
not used. 

In the principles to be laid down in this 
lesson not only will we challenge contem- 
porary economic thought, but we will also 
put the entire American industrial system, 
as now manned and managed, to a very 
severe critical test. In a word we will put 



192 Fifty Lessons on Utilitarian Economics 

both our economists and our industrial sys- 
tem on trial. At the outstart, however, we 
shall concede that much of our industrial 
waste, waste of energy, waste of talent 
and waste of material, is inevitable. We 
are new, comparatively speaking; our 
growth has been rapid, and phenomenal in 
magnitude ; we have expanded into new and 
untried fields; our industrial system is, in 
a very real sense, a complex of the achieve- 
ments of science and invention and all the 
useful and practical votaries of civilization, 
and it is not less than logical that our 
economic practices should reflect some of 
the bewilderment which has come with our 
amazing progress and sudden rise to a 
position of world eminence and world su- 
premacy in the vast field of production. 
Waste, in such extraordinary circum- 
stances, is quite natural. But we have at 
length reached a point when sobriety of 
thought, of opinion and of action are neces- 
sary, not only to our continued progress, 
but to the durability and lasting benefit of 
what we have already achieved. 

We wish again to emphasize the distinc- 
tion between utilitarian values, values real- 
ized by reason of the use we made of forces 
and things, and the values that are utili- 
tarian only in a potential sense. 



From the School of Utilitarian Economics 193 

USED WEALTH HAS UTILITARIAN 
VALUE, 

UNUSED WEALTH, of whatever kind, 
has UTILITARIAN VALUE ONLY IN A 
POTENTIAL SENSE, 

When we speak of idle machinery, idle 
buildingsy idle land, idle money and idle 
men as elements of the idle wealth of the 
nation, we have in mind, therefore, not the 
actual, but the potential utilitarian value 
of these things. Superficially only, there- 
fore, is it a contradiction in terms to speak 
of idle wealth. We go even further and 
speak of idle energy. Ordinarily, and for 
ordinary purposes, to be sure, we cannot 
think of energy as being idle. The words 
contradict each other. Yet, in utilitarian 
economics, the phrase idle energy becomes, 
not only understandable, but of very vital 
significance from an economic standpoint. 

An idle machine, or a man out of work, 
represent idle energy. Mind, muscle, ma- 
terials and a vast assortment of things pos- 
sessed potentially of very high utilitarian 
value, represent just so much idle energy, 
that is, so much possible productive power 
not in actual use. It is all usable, but not 
in use. 

Let us take an idle industrial plant, a 
sawmill, for instance: This plant is the 



194 Fifty Lessons on Utilitarian Economics 

final product of a great many useful en- 
ergies. Some of these energies began in 
the woods, some of them in the bowels of 
the earth ; they were continued in factories 
of many kinds and moved along diverse 
lines until they culminated in the produc- 
tion of a sawmill fully equipped to answer 
all the useful purposes for which such 
plants are established. This plant repre- 
sents idle wealth, and the value of this idle 
wealth is the cost of the plant, plus the 
value of a possible maximum output during 
the period of idleness, plus the value of idle 
labor, plus the value of a variety of other 
energies that depend upon the energies of 
the sawmill. 

If the plant is idle on account of a strike, 
it is not enough to say that the loss can be 
computed by adding the loss in wages dur- 
ing the period of idleness to the loss sus- 
tained by owners. That is only a part of 
the loss incident to the idleness of the plant, 
for when the plant ceased operation many 
other useful energies dependent upon it 
were also stopped. 

Or we will take a still more striking ex- 
ample. According to a recent statement 
(June, 1921) there are about 6,000,000 
men out of work in the United States. The 
daily loss due to the idleness of 6,000,000 



From the School of Utilitarian Economics 195 

men is appalling in magnitude. Because 
of mechanical aids used in modern indus- 
try, let us say that one man, on an average, 
can now do the work that five men used to 
do in productive enterprises. It is evident, 
on this basis, that our daily loss in produc- 
tive power, therefore, is not merely in the 
idleness of 6,000,000 men, but in the total 
of their productive power, which would 
equal 30,000,000 men when men were un- 
aided by improved mechanical devices. The 
daily value of the productive energy we 
have thus halted is of staggering signifi- 
cance. Yet it is only a part of the tre- 
mendous loss due to idle wealth in this 
country! 

The unused energy and the unused skill 
of these idle men are as much a part of our 
vast amount of idle wealth as are the plants 
and properties they could put to profitable 
use. It is all economic wa^te, and as such 
is a tax upon the things that we produce, 
which is but another way of saying that 
idleness is a tax the workers must pay. 

We need not here consider the cost of 
strikes and lockouts except as mere inci- 
dents to the general theme of this study; 
but students who are sufficiently interested 
will find in these too numerous industrial 
happenings a not uninteresting aspect of 



196 Fifty Lessons on Utilitarian Economics 

the subject of idle wealth in America. As a 
fact the idleness due to strikes and lock- 
outs, the idleness of vast numbers of men 
and the wage loss, and the idleness of many 
large industrial plants and the business 
loss, present, when combined, an appalling 
form of economic wastefulness in America, 
— a form of wastefulness that is avoidable, 
too, by the exercise of a little foresight and 
a little tolerance and the cultivation of a 
better understanding of the mutual char- 
acter of all of our economic problems. 

Idle money is idle wealth. The miserly 
man who piles up money solely for money's 
eake, instead of putting it into profitable 
enterprises, is often as much a detriment 
to himself as he is to society. And this 
applies as much to a man in the banking 
business as it does to an individual who 
hides his money in his sock or stores it in 
a vault. 

For economic purposes there is no dif- 
ference between an idle dollar, an idle ma- 
chine or an idle man, for they all are a part 
of our enormous quantity of idle wealth in 
America. 

When we speak of an idle man we by no 
means confine the phrase to the man who 
works with his hands, whether as skilled 



From the School of Utilitarian Economics 197 

or unskilled laborer. While losses due to 
muscular or physical idleness are very 
heavy and make up a considerable part of 
our idle wealth, they are by no means all 
that we lose on account of this idleness of 
men. Nor need a man be wholly out of 
service to come within the classification. 
As a fact only a small per cent of men in 
service do their best and their most, day 
in and day out. Only a very few men rise 
to the full maximum of their physical and 
mental capabilities; and just to the extent 
that they fall below this maximum they 
contribute to the idle wealth of the nation, 
whether the service they render is mental 
or manual. Nor will we be able to avoid 
the economic waste due to these forms of 
idleness in industry until we inculcate more 
rigid and juster views of morality in in- 
dustry and achieve higher standards of 
efficiency. 

If we could sum up this suggestive study 
of idle wealth in America by a statement 
in detail of what we lose every year on ac- 
count of idle men, idle machinery, idle 
lands, idle money, including in the state- 
ment the value in use of all the intelligence, 
skill and energy we yearly waste by reason 
of lack of use, no doubt most of us would 
be shocked by the magnitude of the total. 



198 Fifty Lessons on Utilitarian Economics 

Such a statement is not impossible, in at 
least an approximate sense; and it would 
profit us to know it in detail, for it would, 
without argument or other emphasis, at 
once convince us of the imperative need of 
ridding our industrial system of all the 
evils, in both the ranks of labor and in the 
ranks of capital, that yearly add these stag- 
gering burdens to the economic load we 
must carry. 



From the School of Utilitarian Economics 199 



The Function of Profits 



How Betterments and Expansions Are Made — Short- 
sighted View of Profits hy Unripe Economists — Definition 
of Profits. 

Lesson No. 36 

Despite what some of our more radical 
economists may think and say on the sub- 
ject, we have not yet progressed far enough 
in our journeyings toward Utopia to do 
away with profits in industry and business 
generally; and it is rather shortsighted, we 
think, for any man to look upon profits as 
other than necessary and advantageous, 
from the standpoint of our economic and 
social wellbeing. 

The function of profits is too well un- 
derstood to need more than a general state- 
ment in this lesson. Profits are used, not 
only to take care of necessary expenses not 
included in the wage account, but to make 
improvements and expansions in plant 
equipment also. These improvements and 
expansions are necessary to meet growing 
demands for products and to take care of a 
steadily increasing number of men and 
women seeking employment. 

There would be no fund out of which to 



200 Fi^ty Lessons on Utilitarian Economics 

make these improvements and expansions 
if the owners of plants did not get a profit 
out of the products they put on the market. 

Profit, as a rule, represents the differ- 
ence between what it costs to produce and 
market an article, and the price for which 
it sells. 

The contention that the price for which 
a thing sells is the amount which ought to 
be paid for its production is wholly unten- 
able, for the reason that this would enable 
present labor to absorb the full value of all 
that both present and pa^t labor have pro- 
duced. Besides it would deny capital and 
other necessary and indispensable agents 
in production both the recognition and the 
reward to which they are justly entitled. 
As a matter of fact there is no equitable 
basis upon which we can abolish the profit 
system, for the very simple reason that the 
capital of today, including tools, machinery 
and all that we use in productive processes, 
is not in any exclusive sense, the product 
of the labor of today. 

Men who use this capital should, as a 
matter of morals, make a fair return to the 
men who nominally own it; indeed such 
return is an economic necessity as well as 
a moral obligation, for our industries could 



From the School of Utilitarian Economics 201 

not keep up with the increasing demands 
that press upon them if forced to operate 
without profit. Besides we would lose the 
incentive and individual initiative which 
have given to us the great enterprises that 
have placed us among the foremost nations 
of the world. 



From the School of Utilitarian Economics 203 



The Theory of Surplus- Value 

Fundamental Fallacies of Marxian Concept — Existence 
of Surplus — Value Defined — Errors Built Upon Wrong Conr 
ception of Profits. 

Lesson No. 37 

What we have said about the function of 
profits in the modern scheme of industry 
prepares us for a brief consideration of 
the theory of surplus-value, a subject of 
some importance because of the very large 
number of persons who have been misled 
by it. Indeed the only reason for introduc- 
ing the subject of surplus-value at all in 
these studies in utilitarian economics is to 
point out some of its fundamental fallacies, 
and to set aright, if possible, persons who 
have been led to wholly erroneous economic 
conclusions because of a belief in the sound- 
ness of this theory. The entire structure 
of Marxian economics rests upon the theory 
of surplus-value. 

Marx wasted a great deal of time and 
space telling what he meant by surplus- 
value. One word would have defined its 
meaning, and that word is profits. Those 
who accept Marx's conclusions believe that 
the worker should have all that he pro- 



204 Fifty Lessons on Utilitarian Economics 

duces, and when we understand that they 
regard the finisher of an article as the pro- 
ducer of the article, the economic injustice 
of this notion must be apparent to even the 
dullest of economists. For if the finisher 
is to be regarded as the 'producer, in any- 
given case, and is to take the full value of 
the thing he claims to have produced, what 
is to become of the many other persons who 
contributed something of energy and talent 
toward the production of the finished ar- 
ticle? Moreover what about improvements, 
new equipment and expansions generally 
needed to take care of an increased num- 
ber of men and women who want work? 
What about the demand for more goods, 
for increased production? 

As a matter of fact the idea of surplus- 
value is wholly chimerical. 

There are no surplus- values in our indus- 
trial economy for precisely the same rea- 
son that there are none in nature. Cer- 
tainly we can hardly look upon a thing so 
necessary and vital as profits as a surplus- 
value, nor as any other kind of surplus. 

Besides how can a thing be of value if 
it is a surplus, that is, if it is more than 
we want, or need, or more than we should 
have? 



From the School of Utilitarian Economics 205 

The whole theory of surplus-value is il- 
logical, and altogether wicked in its influ- 
ences on economic thought, for we may 
trace many popular errors and fallacies 
back to this Marxian theory, and these, in 
turn, are responsible for many of our in- 
dustrial misunderstandings and contro- 
versies. 



LESSONS No. 
THIRTY-EIGHT, THIRTY-NINE, 

FORTY, FORTY-ONE, 
FORTY-TWO and FORTY-THREE 



Copyright 1921 



I 



From tJie School of Utilitarian Economics 207 



Old and New Economics 



Demand for New Note in Study of Old Science and Solu- 
tion of Modern Problems — Error of Teaching Principles of 
Old Economists — Smith and Malthus as Examples — Some 
of the Mistakes Due to Adherence to Old School. 

Lesson No. 38 

What is most needed to clear up con- 
fusions that now burden economic thought 
in America is the abandonment of old and 
useless, and wholly inapplicable economic 
theories in the teaching of economics. 

Books of the older schools of economists 
will help us to understand the history and 
development of economics as a science; but 
these books will not help us to understand 
the economic relations of persons and 
things in modern industrial life. 

Many of the old principles of political 
economy, sound enough, perhaps, when 
first announced, cannot now be applied, 
and it is misleading to teach them. 

Yet, in many of our text books, from 
which students get their notions of eco- 
nomics, great stress is laid on principles 
announced by economists more than a cen- 
tury ago, some of them before the Ameri- 
can Republic had come into being. It is 



208 Fifty Lessons on Utilitarian Economics 

not conceivable that Adam Smith, if living 
today, would adhere to the economic phil- 
osophy, in all of its details, he published in 
1776, under the title of an "Inquiry into 
the Nature and the Causes of the Wealth 
of Nations/' Both the nature and the 
causes of wealth have changed since Dr. 
Smith's time, and it is not unfair to assume 
that the opinions of the able Scotchman 
on economics would have reflected these 
changes. 

More than a century in invention, in 
mechanics, in the construction and use of 
new appliances, — the specialization in 
craftsmanship, the discovery and use of 
new materials and new forces, the applica- 
tion of economies in the processes of pro- 
duction, and the ceaseless fight against the 
waste of energy and materials, — all these 
and many other things have made pro- 
found changes, not only in the nature of 
wealth, but in the causes of wealth also, 
since the time of Adam Smith. 

Or take a more striking case: In 1798 
Thomas Robert Malthus, an English econ- 
omist, announced the doctrine that popula- 
tion increases faster than the means of sub- 
sistence. We still find this Malthusian doc- 
trine printed in our text books. When 
Malthus printed his "Principles of Popula- 



From the School of Utilitarian Economics 209 

tion/' in which this doctrine is announced, 
the actual relation between population and 
wealth, and the rate at which both had in- 
creased, might have justified the doctrine. 
But in the light of our own experiences, 
and our own knowledge of world conditions 
today, can we now accept this as an eco- 
nomically sound doctrine? Can we accept 
any doctrine or any principle founded upon 
the recognition of a fixed and constant rela- 
tionship between the increase in population 
and the increase in the means of subsist- 
ence? Obviously not. Consider the con- 
dition of Germany before the recent World 
War: The people of Germany were smoth- 
ering, almost literally, beneath the products 
of their own industry. Not only had they 
produced faster than they could consume, 
within the sphere of their own wants, but 
production had been so rapid that the prob- 
lem of a market outside of Germany for 
German products was a factor of some 
moment in bringing about the greatest war 
in history. Clearly, the Malthusian doc- 
trine had absolutely no application to con- 
ditions in Germany with respect to in- 
creases in population and the means of 
subsistence. Or take France as an equally 
striking example of the unsoundness of this 
doctrine : For many years before the World 



210 Fifty Lessons on Utilitarian Economics 

War France's big problem was a low birth 
rate. Here, too, was a country where pro- 
duction was increasing at a more rapid rate 
than population, a condition absolutely 
contrary to the doctrine of Malthus. 

These illustrations are given merely to 
show the utter impossibility of determining 
any fixed relation between the increase in 
population and the increase in the means 
of subsistence; and what is true of the 
Malthusian doctrine is also true of many 
doctrines and principles which have as- 
sumed the constancy of laws in many of 
our text books on economics. 

It is as much out of place to teach these 
old and outlawed principles of economics 
today as it would be to teach astronomy 
from books written before the time of Co- 
pernicus. 

Society, industrially and otherwise, is in 
a state of perpetual flux. No day is an 
exact reproduction of the day before. Time 
is the only element of permanency in our 
relations, and the sooner we realize and 
teach these truths in our economics, the bet- 
ter it will be for us. 

We do not mean to throw away com- 
pletely all the old books on economics, nor 
to ignore completely all the principles to 
be found in them. These books are facts 



From the School of Utilitarian Economics 211 

in the flow of thought on economic and so- 
cial relations and contain much that is of 
historical value. 

What we need is new economics^ with a 
new nomenclature, to be taught in a new 
way. Such is our purpose; and we mean 
to construct this new economics out of the 
practical materials to be found in the in- 
dustrial world of today, and not out of the 
empty husks passed on to us out of cen- 
turies that have gone before. 

Our new economics must be sufficiently 
elastic to avoid the errors of arbitrariness 
in principle, so characteristic of the old 
school, and at the same time accommodate 
certain principles to be deduced for the 
purpose of achieving approximate stability 
in our industrial relations. But when we 
have realized approximate stability in in- 
dustrial relations, and have deduced a prin- 
ciple therefrom, it must not be understood 
that this principle is absolutely unchange- 
able, for that, instantly, would again 
plunge us into the errors of the old econ- 
omists. 

We are familiar with changes wrought 
in the meanings of words. 

Economic principles, subject to the same 
influences, will change their meaning in the 
same way, and as the meaning changes, 



212 Fifty Lessons on Utilitarian Economics 

just as in the case of words, we must 
change the application. This changeable- 
ness in principles flows logically from the 
changeableness in the facts from which we 
deduce the principles. Take some of our 
most definite and vital facts in economics, 
for instance : It requires so much food per 
person to sustain life, and so many yards 
of cloth to provide clothes for a man or a 
woman. A small amount of food will keep 
one person in prime condition ; another per- 
son requires twice the quantity, and we 
will find this same difference when it comes 
to the quantity of cloth needed to comfort- 
ably clothe them. 

Obviously it is absurd to deduce a prin- 
ciple, having the constancy of a law, from 
facts that are so variable. Of course, for 
convenience, in cases of this character, and 
in others also, we fall back on the law of 
averages. But here, too, we must proceed 
with caution, for our own law of averages, 
based upon variable facts, is itself subject 
to fluctuations and change. 

In the nation, and in the several states, 
new policies have been devised and new 
laws passed to meet changes that have oc- 
curred from time to time in our industrial 
life; indeed changed economic conditions 



From the School of Utilitarian Economics 213 

have made these changes in national and 
state policies of frequent occurrence. 

In teaching economics we must also take 
equally effective note of these changes. We 
must realize that we no longer climb up 
on the roofs of our houses with astrologers 
to study the positions and movements of 
the stars. Our astronomers are more ac- 
curate. We no longer look to the alchemist 
to find for us the elements and properties 
of things dug out of the earth or produced 
on its surface. Our chemists are more ac- 
curate, more reliable, more thorough. It 
is in this spirit and for these purposes that 
we have undertaken to redefine our eco- 
nomic relations, so that each of us may 
have a clearer and juster understanding 
of our position in the modern scheme of 
industry, and of the responsibilities that 
rest upon us. 

No man has a moral right to consume all 
he produces. 

Such a standard of morality is lower 
than the earthworm's; for while the dirt 
he digs is his food, he is a plowman for na- 
ture, and many forms of life, not akin to 
his own, will reap where he has sown. 

More or less, most of us are in the posi- 
tion of our nude, foodless, shelterless 
friend, for, considering our many wants 



214 Fifty Lessons on Utilitarian Economics 

and needs, there isn't a great deal we can 
do for ourselves; indeed, most of us would 
be quite helpless if supplied with the raw 
materials out of which to make what we 
need and the tools with which to make it. 
How many of us could make our clothes, or 
our shoes, or the things in which we pre- 
pare and serve our food, even though sup- 
plied with the materials and the tools? 

Many hands have been employed to make 
the clothes we wear and the food we con- 
sume. Turn where we may, whether in 
our work or in pleasureable recrea- 
tions, and, if we are thoughtful, we are at 
once reminded of an endless variety of 
obligations, big and little, for we are con- 
stantly using things made and passed on to 
us by other hands. 



From the School of Utilitarian Economics 215 



Economics and the Law 



Legislative Attempts to Correct Economic Evils Fre- 
quently Ahortive — Failure to Recognize Basic Fact of 
Change Cause of Confusion — Industrial Problems Often 
Aggravated hy Clumsy Efforts to Apply Legislative Correc- 
tives. 

Lesson No. 39 

Not a few of the errors made in our time 
in dealing with economic problems are due 
to hasty, ill-advised efforts to apply legisla- 
tive correctives to some of our economic 
ailments. 

True many of the laws we have passed 
on these subjects are not only justifiable, 
but are positively beneficial, for they have 
approximated the relief we had in view 
when we passed them. But that cannot be 
said for the large body of laws enacted in 
recent years on economic subjects. Many 
of them have been abortive. Some of them 
have merely aggravated the industrial evils 
they were designed to correct. 

The fundamental error in all these legis- 
lative efforts is in the attempt to apply in- 
fiexible rules to problems and conditions 
that change from day to day. Nearly all 
labor laws, laws relating to labor prob- 



216 Fifty Lessons on Utilitarian Economics 

lems, lack that element of elasticity needed 
to accommodate constantly changing con- 
ditions in our industrial life. We do^ not 
mean to say that certain broad principles 
cannot be laid down to guide men in the 
adjustment of industrial disputes. Such 
principles are necessary and should receive 
legal recognition. But when we go beyond 
this broad declaration of principles, and 
attempt to state the precise terms upon 
which these industrial disputes should be 
adjusted, we do violence to reason by at- 
tempting the impossible. It is very much 
like writing a court verdict in advance of 
a trial of the case on its merits. 

There are some things the law cannot 
do for us. 

Nor should we ask the law to do for us 
the things we ought to do without recourse 
to the law. 

In some of the laws bearing upon eco- 
nomic problems there are elements of elas- 
ticity which make it possible to attain ap- 
proximate justice in the settlement of cer- 
tain industrial disputes. Such laws, for 
instance, as prescribe minimums and maxi- 
mums, thus leaving latitude for adjustment 
upon the merits of each case, may be in- 
cluded in this class. Even these laws, how- 
ever, are not altogether in harmony with 



From the School of Utilitarian Economics 217 

the principles of utilitarian economics, for 
they attempt to introduce into our economic 
affairs a rigidity that must always remain 
fatally at variance with the condition of 
change which is the only constant element 
in our economic life. 

When we once recognize the basic truth 
that we are in a state of flux, that nothing 
is fixed, that everything is moving, and 
that, paradoxical as it may seem, change 
is our only constant element in economics, 
we will abandon all these efforts to go be- 
yond broad generalizations in such laws as 
we may see fit to enact on economic ques- 
tions. The recognition of this truth will 
rid us of many errors that now burden 
our industrial life and we will step up to 
higher levels in human relations. 



218 Fifty Lessons on Utilitarian Economics 



Money and Wages 



Difference Between Money Wages and Real Wages — 
Wages Represent Worker's Reward, But Not Whole Value 
of Service — Measure of Wages in What Worker Buys in 
Market — Production as Vital and Determining Factor in 
Fixing Wage Levels. 

Lesson No. 40 

Many workers, indeed it is safe to say- 
most workers confuse money wages with 
real wages. 

Money does not liquidate the labor cost 
in productive processes, or the labor cost 
of service of any kind. It is a mere con- 
venience, a yardstick, in a sense, used to 
determine the relationship between service 
and reward, or between a value given and a 
value received. 

The money in the worker's pay envelope 
should in part fairly measure, not the 
whole value of his services to industry, but 
that part of the value of his labor to which 
he is justly entitled. 

To give the worker less than this would 
be to cheat him out of his dues. To give 
him more would be to cheat industry. 

The money used in this transaction be- 
tween the worker and the employer is, in 



From the School of Utilitarian Economics 219 

one sense, an order on the market for what 
the worker may want and need, for the 
worker will at least exchange a part of his 
wages for food, clothes, fuel and other 
necessities. The worker's real wages^ 
therefore, must be sought in those things 
for which he exchanges his money wages, 
and his real wages may be said to be high 
or low according to the quantity and quali- 
ty of things for which he can exchange his 
money wages. 

Here once again we encounter the big 
problem of production. 

Wages can never be high when produc- 
tion is low. 

We here speak of real wages. For money 
wages may be high when the output is low. 

But real wages, the wages with which 
we buy things, the wages we exchange for 
commodities, will be high or low accord- 
ing to the cheapness or dearness of the 
things we buy; the things we buy will be 
cheap or dear, according to the market 
supply, and the supply will be plentiful or 
scarce according to the output in field, fac- 
tory and mine. 

Thus the real wages of the worker, in 
the final analysis, must be reckoned on the 
basis of production. 

Our experiences during the World War 



220 Fifty Lessons on Utilitarian Economics 

ought to have made this truth plain. Wages 
touched unprecedentedly high levels. But 
we could not keep production up to a point 
that would enable us to buy more in the 
markets with our wages. The prices of 
the things we wanted and needed were also 
on high levels. We bought no more with 
high wages in war times than we had 
bought with low wages in times of peace, 
and, in most cases, not as much. 

This single recent experience is enough 
to convince us that there is a very vital dif- 
ference between money wages and real 
wages, and that the relation between real 
wages and production is not only intimate 
and vital, but controlling and conclusive in 
its influence upon wages. 



From the School of Utilitarian Economics 221 



Wages and Credit 



Relation Between Real Wages and the Credit Structure 
of Industry — Worker Not Entitled to Full Value of Services 
Rendered — Must Return Something to Yesterday for Ad- 
vances Made and Provide Something for Needs of Tomor- 
row — The Utilitarian View. 

Lesson No. Jil 

Workers who believe the wages they re- 
ceive should represent the full value of 
their services are involved in errors of rea- 
soning that are alike fundamental and 
dangerous. 

Wages do not, and, in the nature of 
things, should not represent the full value 
of a man's services. 

If a man is worth anything to a plant, 
he is worth more than he takes out of it in 
wages. Workers who fail to realize that 
they must put more into industry than 
they take out of it are utterly blind, not 
only to their own interests, but to certain 
basic economic principles also which lie at 
the very heart of our industrial system. 

Part of the value of a worker's services 
must go into what may be called a plant 
fund for these very vital purposes: (1) To 
meet current plant expenses not included 



222 Fifty Lessons on Utilitarian Economics 

in the wage account; (2) to provide bet- 
terments and expansions in plant opera- 
tion, and (3) to make a fair return to those 
who have advanced money, or extended 
credit in some form, to establish and oper- 
ate the plant until it can sustain itself out 
of its own resources. 

Credit extended to industrial plants is 
as m.uch the concern of the workers as it 
is of the owners, and the financial and 
moral obligations imposed by credit ex- 
tension in such cases must rest equally, in 
the final analysis upon both workers and 
owners. For without this extension of 
credit, there would have been no plant, and, 
therefore, no jobs for the workers employed 
in it. 

Credit, as here used, is not confined to 
such moneys as plant promoters may bor- 
row in order to launch the enterprise; it 
means also such moneys as these promoters 
may advance out of their own funds; for 
persons who, as promoters and owners of 
an enterprise, put their own money into it 
are entitled to as much consideration as we 
commonly extend to banks or other institu- 
tions, or to persons not directly interested, 
who may advance money to establish a new 
enterprise or to keep an old enterprise a 
^^going concern," 



From the School of Utilitarian Economics 223 

If every person interested in industry 
should insist upon taking out of industry, 
in wages, the full value of their services, 
obviously there would be no fund out of 
which to take care of the obligations here 
considered. It is quite plain that such a 
practice would be disastrous. Workers, 
from a utilitarian standpoint, could hardly 
make a more certainly destructive demand 
than to insist upon the full value of their 
service in industry. It would drive capital 
out of the industrial field; our industries 
and our commerce would stagnate, unem- 
ployment, poverty and crime would rapidly 
increase, and we would inherit a long train 
of kindred economic ills. 

In considering wages, and other prob- 
lems in utilitarian economics, we must keep 
in mind the division of time into the three 
grand periods to which we referred in the 
introductory lesson in discussing the plight 
of the Detached Man, for always we will 
find the interests and obligations of Yes- 
terday, Today and Tomorrow so intimate- 
ly interwoven that we cannot consider one 
period without considering them all. 

Today's wages are not paid out of the 
products of Today's work. 

They are paid out of that vast and var- 
ied accumulation of things Yesterday has 



224 Fifty Lessons on Utilitarian Economics 

passed on to us, out of the surplus value 
of services rendered by workers who were 
too just and too generous to take out of 
industry the full value of the energy and 
talent they put into industry; and Today's 
workers, in their turn, must help take care 
of Tomorrow's wages, and the men and 
women who are to do Tomorrow's work. 

It is utterly vicious, from an economic 
standpoint, to advance the theory that To- 
day's bills must be paid out of Today's 
products, and that Today's doings and To- 
day's accounts must be confined to Today, 
with no sort of regard for either Yesterday 
or Tomorrow. 

Yesterday is Today's storehouse. Today's 
banker, and Today must be storehouse and 
banker for Tomorrow. 

Whoever absorbs today the full value of 
today's services makes no return for a rich 
inheritance from Yesterday, cheats Tomor- 
row out of its dues, and finds himself as 
penniless and as hopeless at sunset as he 
was at sunrise. 

Not only so, but if no provision is made 
for expansion and betterments out of serv- 
ice values it may not be possible to provide 
employment for the increased number of 
workers in the future. Men and women 
are constantly arriving at maturity and 



From the School of Utilitarian Economics 225 

seeking employment in industry. New 
positions must be provided in old indus- 
tries, or in new industries, to take care of 
these new workers, else they may become 
applicants for positions already filled, with 
the result that the general trend of wages 
will be downward. If wages are not low- 
ered as the result of an oversupply of work- 
ers, the outcome will be the same, in an 
indirect way,^ for men and women out of 
work must live, and their only chance to 
live is to live out of the earnings of men 
and women engaged in productive service. 

The idle man's bills, in the final analysis, 
are paid out of the worker's earnings. And 
it costs the worker more to maintain a man 
in idleness than it does to help provide him 
with a position where he can take care of 
himself. 

There is another vital error current 
among workers in America and elsewhere. 
Workers assume the existence of a wage 
system and almost constantly speak of it 
as a system of industrial slavery. There 
is no such thing in America as a wage 
system. Nor is there any such thing in 
America as a system of industrial slavery. 

Wages in America should not be looked 
upon as arbitrary exactions, wrested from 



226 Fifty Lessons on Utilitarian Economics 

unwilling and unfriendly employers by or- 
ganized workers. 

Nor should they be regarded as mere 
gratuities employers fling to the men who 
work for them. 

Wages, as a rule, constitute a bond of 
sympathy and friendship between the men 
who work and the men who pay. Wages 
cannot fairly be considered a mark of in- 
dustrial bondage. Rather should we look 
upon wages as evidence of personal inde- 
pendence, personal frugality and self-reli- 
ance, and of that solid personal capacity 
necessary in the making of a full man. 

Wages, instead of being either an exac- 
tion or a gratuity, represent the wholesome 
philosophy of a lift for a lift. 

Moreover, until we can iron out some of 
the rough places in the American industrial 
system, we cannot with either accuracy 
or propriety, speak of an American wage 
system. 

One of the main industrial troubles in 
America is that we have no wage system. 
We have instead certain disconnected labor 
policies and practices, all of them the result 
of loose thinking and hasty acting, and all 
of them as unsatisfactory to a majority of 
workers as they are to a majority of em- 
ployers. These policies and practices are 



From the School of Utilitarian Economics 227 

wholly lacking in uniformity, consistency 
and stability, and are enforced without any 
sort of regard for either sound economics 
or elemental justice. 

It may be doubted whether any other 
civilized country has a more unscientific 
method of arranging scales of wages than 
America has. 

Under present practices and policies in 
America, as insisted upon by large groups 
of workers, no note is taken of the differ- 
ences that exist between workers in skill, 
in industry and intelligence. The whole 
mass of a given group is raised to a com- 
mon level, so far as wages are concerned, 
with the result that the energetic, the in- 
telligent and efficient worker received no 
more for his services than the lazy, ignor- 
ant and inefficient worker. 

If we had in America a wage system, 
based upon scientific considerations, these 
galling injustices in industry would not be 
possible. 

A man's wages should be determined by 
the value of a man's services. 



228 Fifty Lessons on Utilitarian Economics 



Wages and Commodity Prices 



Cost of Production Determines Price Levels — Cheap Com- 
modities Not Produced at High Wage Rate as Rule — Labor 
Liquidated in Terms of Commodity Prices — Fallacy In- 
volved in Views Concerning Rise or Fall in Wages or Prices. 

Lesson No. Jf2 

Wages are a big and vital factor in 
the determination of commodity prices. If 
the labor cost of an article is high, the mar- 
ket price at which the article sells will also 
be high. Influences may intervene to alter 
the rule; but as a general thing the cost 
of production is the controlling factor in 
determining price levels. 

CHEAP COMMODITIES CANNOT BE 
PRODUCED AT HIGH LABOR COST. 

And as labor cost is finally liquidated in 
terms of commodity prices, it is alike super- 
ficial and untenable to assume that high 
wages in themselves will enable the worker 
to buy in the market larger quantities of 
what he may need or want. The fallacy 
underlying this popular assumption is fun- 
damental. 

There never would have been any ex- 
cuse for the American tariff system if labor 
cost had not been a vital and determining 



From the School of Utilitarian Economics 229 

factor in fixing prices. The theory of our 
tariff is that the rate should equal the dif- 
ference between the labor cost of produc- 
ing an article abroad and the labor cost of 
producing the same article in America. 
Labor in foreign countries being much 
cheaper than it is in America, it has been 
assumed that articles produced at the high- 
er rate of wages in America could not com- 
pete, even in the American market, with 
articles produced abroad and shipped to 
this country, unless the government im- 
posed upon such articles a tax equal to the 
difference in the labor cost of producing 
them. 

If the rate of wages paid farmer labor 
in our wheat fields is high ; if the labor cost 
of milling wheat is high, and the labor cost 
of making and baking bread is high, the 
price of bread also will be high. This eco- 
nomic truth is familiar to bread consumers 
in urban centers who pay more for bread 
when the cost of the labor elements enter- 
ing into the production of bread is high. 
The same rule, of course, applies to meat, 
clothing, fuel or any other article in com- 
mon use. 

These statements bring us back to the 
relation between wages and commodities, 
for, as we have seen, the worker, in the 



230 Fi-fty Lessons on Utilitarian Economics 

final reckoning, exchanges his labor, not 
for money, but for commodities. 

Labor is paid in finished things, that is 
in things ready for use. 

If the cost of producing these things is 
high, the prices at which they will sell will 
also be high. This truth was so forcibly 
illustrated during the World War period 
that argument is not needed to emphasize 
it. In that period both wages and prices 
reached unprecedented high levels. The 
question as to which should first rise or 
fall, the wages of the worker or commodity 
prices, is debatable on account of the com- 
plex nature of the modern industrial sys- 
tem. Probably in some cases wages would 
be the first to go up or down, according to 
the general situation, and in other cases 
commodity prices would be first to feel the 
stimulating or the depression influences at 
work in industry. 

Here again we encounter that peculiar 
dogmatism that marks practically every 
aspect of economic discussion in our time ; 
for there are men who assert with con- 
fidence, and sometimes with vehemence, 
that wages should be first to respond to a 
changed condition, while others, with equal 
confidence and vehemence, assert that com- 
modity prices should first respond to the 



From the School of Utilitarian Economics 231 

changing or changed economic order. Both 
are wrong insofar as they attempt to apply 
a rigid rule to this problem in our economic 
life, for here again the rigid rule will not 
work. 

Besides the wage rate and commodity 
price levels, if left uninfluenced and unre- 
strained by extraneous forces, will finally 
recede or rise to an approximately normal 
relationship. 



232 Fifty Lessons on Utilitarian Economics 



Work and Health 



Workers Shielded Against Unwholesome Conditions in 
Modern Industry — Helpful Laws to Protect Health of Work- 
ers — Voluntary Rules and Regulations in Big EstaMish- 
ments — Efficiency and Health — The Sick Man Not Neglected 
or Outraged. 

Lesson No. Jf3 

. In considering the utilitarian value of 
health in economics, and the intimate re- 
lation between health and work, we enter 
a field so familiar that it is not necessary 
to go further than to state a few pertinent 
facts. 

No man can do his best work unless he 
is physically and mentally fit to do it. 

True, in the arts and sciences many men 
and women sorely afflicted, some of them 
mentally and some of them physically, have 
risen to high positions. This is particular^ 
ly true when we come to scan the lists of 
great musicians and composers, poets and 
other men of letters, scientists, inventors 
and men and women of the learned profes- 
sions. This fact has caused the popular, 
and perhaps justifiable belief that there 
is class kinship between genius and mad- 
ness. 



From the School of Utilitarian Economics 233 

But we are concerned here with the re- 
lation existing between work and health in 
industry. We know that the sick man is 
not as efficient in industry as the well man, 
and hence in modern industry we have in- 
troduced many wholesome and highly bene- 
ficial rules to protect the health of work- 
ers. We have improved the conditions of 
labor with a view of shielding workers 
from craft diseases and premature break- 
downs, not solely in behalf of increased 
efficiency in industry, but also to prolong 
the worker's life and increase his happiness 
and general well being. 

Some of these rules and regulations have 
been niade the subject of legislation, but 
many of them are voluntary and have been 
adopted out of unselfish consideration for 
men and women employed in some of our 
large institutions. Indeed in most of our 
big factories and big commercial establish- 
ments we find many wholesome rules en- 
forced, many comforts and conveniences 
installed, that are not required by law, but 
owe their existence wholly to the humani- 
tarian impulses of employers and the men 
who manage their institutions for them. 

This fact presents to us one of the most 
cheerful and encouraging aspects of mod- 
ern industry, despite the fact that we too 



234 Fi^ty Lessons on Utilitarian Economics 

often lose sight of it because of the bitter- 
ness of controversies having to do with 
other phases of our industrial life. 

Such policies are of enormous benefit, 
not only to industry, but to the human race 
as well. For if they insure us better and 
more efficient workmen, they also make 
for more wholesome and happier conditions 
in our American homes. 

Moreover, there is another cheerful and 
encouraging fact in this solicitude for the 
health of the worker, for while the average 
employer desires healthy workers, workers 
who are fit and practically normal phys- 
ically and mentally, there still exists none 
of the prejudice which once existed against 
afflicted men and women. These, too, are 
carried on our payrolls, often despite the 
fact that they fall much below the standard 
in efficiency and in general fitness to stand 
up under the burdens of their employment. 

This, too, has proved to be both a wise 
and a profitable policy, for in many in- 
stances work of the right sort, and in a 
right environment, has restored the work- 
er to health, and has made of him a useful 
and contented citizen. 

It was something for humanity to have 
learned that the sick man is not filled with 
devils; it is much more, and a much larger 



From the School of Utilitarian Economics 235 

step forward, for us to have learned that, 
in many instances, the sick man is an eco- 
nomical asset we can reclaim, rehabilitate 
and put to very good uses in industrial life. 
Work very often will restore health 
where medicine and all the wisdom of our 
savants have utterly failed. 



LESSONS No. 

FORTY-FOUR, FORTY-FIVE, 

FORTY-SIX, FORTY-SEVEN, 

FORTY-EIGHT, FORTY-NINE, 

and FIFTY 



Copyright 1921 



From the School of Utilitarian Economics 237 



Work and Happiness 



Contented Worker Usually Efficient and Successful — Dis- 
content Makes For Inefficiency — Interested Work Is Pleas- 
ant Work — Happiness as the Great Economic Goal. 

Lesson No. 44 

Happiness, we may safely assume, is the 
supreme aim of every normal human be- 
ing, happiness in the home, happiness in 
business, happiness at work in whatever 
useful sphere we may toil. Too often we 
are inclined to look upon happiness as some- 
thing remote from daily routine, some- 
thing in the domain of dreams, and of con- 
cern only to philosophers and poets. Yet 
it is your most intimate and most immedi- 
ate concern, and mine also, for when we 
come finally to interpret the meaning of all 
our struggling and striving, all our fret- 
ting and fuming over the little and large 
things of the day, we find that it is all a 
ceaseless and feverish search for the things 
and the conditions we think would make us 
happier than we are. 

Happiness is the great goal in economics, 
just as it is in philosophy and religion ; and 
our only chance to attain happiness in this 
world is to dig it out of the work we do. 



238 Fifty Lessons on Utilitarian Economics 

Search as we may for it elsewhere, and we 
will not find it. There is more truth 
than we have realized in the old say- 
ing that "an idle mind is the devil's 
workshop/' for when we are idle we are 
discontented, often sour and cynical in our 
views, and in too many instances do and 
say those things that were better undone 
and unsaid. 

Utilitarianism, applied to our economics, 
would teach us to delve deep into our work, 
whatever its nature, for the happiness we 
are to get out of life. 

The slacker and the striker never get 
the worth of their time out of slacking and 
striking. We have heard much of the 
strenuous life in recent years, and too many 
persons, we sometimes fear, misunderstood 
the meaning of the phrase. We may be 
strenuous without being reckless in the use 
and expenditure of our energies. But we 
must be intensely interested in what we do 
if we are to get a maximum of pleasure, 
and, therefore, a maximum of profit out of 
it. The worker who is not interested in 
his work, and who looks upon his task as 
drudgery, is more to be pitied than cen- 
sured, for he is really missing the essence 
of life. Big pay for what he does will not 



From the School of Utilitarian Economics 239 

supply what is missing in the life of such 
a man. 

On the other hand the worker who looks 
beyond what he earns to the thing that he 
does, who makes an art and a pleasure out 
of the crudest of tasks, and who smiles and 
sings as he toils, not only rises in the es- 
teem of his fellows, but he also pours back 
into his own life the honied essences of real 
happiness, and grows in favor as he grows 
in grace and easily takes his place among 
the successful men in his line of work. 

The cheerful worker is loved, just as the 
cheerful giver is loved; and we are less 
exacting and more liberal, too, when deal- 
ing with a man who puts a little sunshine 
into the day's routine, for, consciously or 
unconsciously, he is sharing with us some 
of the happiness he digs out of his job. 

Happiness makes for efficiency. 

On the other hand the unhappy man in 
industry usually is an inefficient man. 

By happiness we do not mean a silly- 
billy, careless frame of mind ; but a feeling 
of contentment which always brings to the 
surface a hopeful outlook and a buoyancy 
of manner and speech that is at once con- 
tagious and wholesome. 



240 Fifty Lessons on Utilitarian Economics 

What we need in industry, as well as in 
other spheres of human activity, is less of 
the things that are sour and cynical, and 
more of the things that are sunshiny and 
constructive, and we will get these things 
only in proportion to the happiness of men 
in industry, whether workers, managers or 
owners. 



From the School of Utilitarian Economics 241 



Work, Wages and Time 



Unscientific Method of Dealing With Time Element in 
Industry — Relation Betioeen Time, Work and Wages — Dif- 
ferences Between Workers in Industry — Premium on In- 
efficiency Where Time Is Sole Measure of Service Value, 

Lesson No. Jf5 

The element of time has become so im- 
portant in modern industry, and modern 
business life generally, that any discussion 
of economics would be incomplete if it did 
not contain a brief review of this vital fac- 
tor. Many of our knottiest problems and 
bitterest controversies in industry center in 
the question of time ; indeed the three prob- 
lems of Work, Wages and Time are so inti- 
mately interwoven that it is not possible to 
consider one of them without considering 
all of them, for Work is what we do. Time 
is the period in which we do it, and Wages 
is what we get for what we do. 

It cannot be said, we think, that we have 
always given scientific consideration to the 
time elertient in industry; on the contrary 
it must be evident even to the superficial 
thinker that we have often been most un- 
scientific in our treatment of this element. 
No effort will be made here to fix the re- 



242 Fifty Lessons on Utilitarian Economics 

sponsibility for the error of trying to arbi- 
trarily prescribe the length of the work- 
day, for, from the standpoint of utilitarian 
economics, it does not matter whether the 
idea originated with the worker or with 
the employer. The thing vv^e wish to em- 
phasize is the impossibility of trying to 
obtain similar results from dissimilar men 
in the same period of time^ regardless of 
the group to which they belong in industry 
or business, for, as we have hitherto seen, 
one man frequently will do more work in 
eight hours, or even in six hours, than an- 
other man will do in ten or twelve hours. 

In stating this conclusion we are not 
taking into consideration the matter of 
fatigue. We have in mind the natural dif- 
ferences between workers^ differences in 
temperament, movement, energy, skill, tal- 
ent and other qualities that determine the 
efficiency or inefficiency of workers. These 
differences are everywhere apparent, no 
matter what industrial group we may con- 
sider. It is a rather strange commentary 
on our methods of reasoning that we rec- 
ognize the natural differences that exist be- 
tween men in the legal profession, in medi- 
cine, and, indeed, in all the professions, but 
fail to recognize them when we come to 
deal with workers in industry. We draw 



From the School of Utilitarian Economics 243 

the line rather sharply between the shyster 
and the reputable lawyer, between the 
quack and the reputable physician, and be- 
tween the poor and the able in the profes- 
sions, and rate and reward them accord- 
ingly. And yet in industry we observe an 
entirely different rule by placing the ef- 
ficient and the inefficient upon precisely 
the same footing, prescribing the same 
period of service for them, and giving them 
the same rating and the same pay. 

Such is the full import of the arbitrary 
workday, whether it is six, eight or ten 
hours, and it does not require argument to 
convince the thoughtful man or woman 
that such a rule in industry is not only 
unscientific, but it is also unjust, for it re- 
sults in overpay^ in some cases, and in 
underpay in others. 

If we had a scientific wage system men 
and women would be paid according to the 
amount and quality of service rendered, 
and not according to the number of hours 
arbitrarily prescribed as a workday. We 
are not here advocating the adoption of the 
piece system in industry, for we do not 
know whether such a system is either wise 
or practicable; we are simply pointing out 
one of the defects of overstressing the time 
element in industry, and the obvious injus- 



244 Fifty Lessons on Utilitarian Economics 

tice of making this element almost the ex- 
clusive measure of the value of the work- 
er's services. 

As a matter of science, no less than as a 
matter of morals, the arbitrary workday, 
whether long or short, is an anomaly, and 
we should strive to substitute a more scien- 
tific and a juster method of rating and re- 
warding men and women in industry. 



From the School of Utilitarian Economics 245 



Work and Waste 



Fight Against Waste in Modern Industries — Wasteful 
Workers Waste Own Substance — Time, Energy and Mate- 
rial Involved in Wasteful Practices — Who Pays for Waste. 

Lesson No. ^6 

Not until recent years have we fully 
realized the staggering significance of 
waste in the industrial and commercial life 
of America. We are still very far from 
full recognition of what wastefulness 
means, as partly indicated, at least, in the 
lesson devoted to Idle Wealth; but we are 
at length grappling with the problem in a 
more serious way, with the result that in 
a few years, perhaps, we may be able to 
relieve both labor and capital of heavy 
losses due to wasteful practices on the part 
of all classes of society. 

But we have in mind, at the moment, the 
relation between the worker and waste, for 
much of the economic burden of waste falls 
ultimately upon men and women engaged 
in productive labor. It does not matter 
whether the worker wastes time, energy or 
material, it will all come to the same thing 
in the final reckoning. 



246 Fifty Lessons on Utilitarian Economics 

The worker^s waste is a deficit in the 
production account for the day, and it is a 
permanent deficit, for no man can recall 
wasted time, or reclaim wasted energy or 
wasted material, for the same reason that 
we cannot undo a thing that is done, or 
unsay something we have said. 

But, in an economic sense, this shortage 
in the production account will have its in- 
fluence, and it may find reflection in an 
upward trend of commodity prices in the 
market, and a downward trend of wages 
in those industries immediately involved 
in the waste. While it is as impossible to 
reclaim the time, energy or material we 
have wasted as it is to restore something 
we have destroyed, it is a law in economics, 
as inflexible as a natural law, that some- 
where and somehow the account must be 
squared. The process by which this is done 
is not unlike building a new house on the 
site where the old house was burned. It 
requires just so much more labor, energy 
and material to replace the house, and it re- 
quires just so much more labor, energy and 
material to make good the deficit caused by 
the kind of waste we have been consider- 
ing. 

The worker who is wasteful in his work, 
whether in time, energy or material, makes 



From the School of Utilitarian Economics 247 

holes in his own pocket, and this rule is as 
true of the employer as it is of the worker, 
for the waste account must be sponged soon 
or late, and the waster, whatever his posi- 
tion in industry, whether worker, owner 
or manager, must have some share in the 
sponging process. 

We cannot waste anything without wast- 
ing some part of our own substance. 



248 Fifty Lessons on Vtilitarian Economics 



Capital's Cumulative Burdens 



How Load on Capital Increases During Stages in Produc- 
tive Procceses — Wages of Workers Promptly Liquidated 
When Work Performed — Capital Receives No Return Until 
Sale to Final Consumer. 

Lesson No. 47 

In earlier studies we directed attention 
to the fact that labor is always paid when 
the work is performedy but that capital was 
forced to carry the burden of production 
cost, in one form or another, until there 
was final liquidation by the ultimate con- 
sumer. 

The point is vital in any fair considera- 
tion of our productive processes and the 
distribution of the cost burden of these 
processes. 

We wish to note further that this burden, 
from the standpoint of capital, is cumula- 
tive and steadily increases in amount up 
to the time of liquidation. The labor cost 
of initial production processes may be very 
small in comparison with the total labor 
cost to be summed up when the article 
reaches the finished state. At first, there- 
fore, the labor cost resting upon capital is 
nominal only, representing what has been 



From the School of Utilitarian Economics 249 

paid to workers at the beginning of pro- 
ductive processes ; but this burden increases 
at each stage as the article moves tov/ard 
the finished state, for at each stage, from 
initial to final processes in production, cap- 
ital has promptly paid workers for what 
they have contributed to these processes. 

Nor, as we have seen, is capital always 
relieved promptly of this increased burden 
when the final processes of production are 
exhausted, for, in a great many instances, 
years may elapse before the finished prod- 
uct passes into the hands of the ultimate 
consumer. 

Thus capital, in any supposable case, 
must carry the entire burden of labor cost, 
not merely up to the point when the prod- 
uct becomes a finished product , ready alike 
for sale and use, but up to the point when 
the user, the ultimate consumer, buys it 
and thus, for the first time, relieves capital 
of the burden. 

Shallow economists do not usually regard 
this burden on capital as one of any great 
moment ; yet it lies at the very heart of the 
credit system upon which we are bound to 
depend if we are to keep our industries 
going and labor profitably employed. 



250 Fifty Lessons on Utilitarian Economics 

This burden is a debt created for the 
purpose of paying the worker his wages in 
advance of the final sale of the worker's 
product, and as such becomes a rather sa- 
cred obligation and one which ought to be 
liquidated on terms fairly remunerative to 
the groups of men who carry it in order to 
keep our industries going. 



From the School of Utilitarian Economics 251 



Organized Society 



How Men Fit Themselves Into Economic System — The 
Great Compromise — Mutual Concessions — Basis of Economic 
Rights Found in Economic Responsibilities — Lift for Lift. 

Lesson No. 48 

Society, in the broadest possible mean- 
ing of the word, and the individual's rela- 
tion to society, make up the theme which 
runs through all these studies in utilitarian 
economics. We begin with a Detached Man, 
a fanciful character in no way connected 
with or involved in our social system. He 
had no place, no part in our organization; 
but we have made a place and defined a 
part for him, if he wishes to share with us 
the benefits and blessings of organized hu- 
man society. We have outlined his duties, 
his responsibilities, and if we have told him 
what society would expect and exact of 
him, we have also told him what he would 
have a right to expect and exact of society. 

It is not good for this man to be alone, 
just as it was not good for Adam to be 
alone when he fell asleep in Eden. And if 
Adam had to part with a rib in order to 
break the monotony and the gloom of per- 
sonal isolation, so our Detached Man, too. 



252 Fifty Lessons on Utilitarian Economics 

must give something in return for fellow- 
ship in the order to which we belong. We 
shall not exact a rib of him ; but we shall 
exact, as these studies have indicated, a 
lift for a lift, service for service, value for 
value, and when we concede something to 
him, he must concede something to us, for 
life is a great compromise, and mutual con- 
cessions lie at the very base of organized 
human societies. 

Economic rights cannot be asserted and 
maintained in organized human society on 
the basis of the law of the longest claw and 
the sharpest tooth; such rights can be as- 
serted and maintained only upon the basis 
of a clear and active recognition of the 
duties and responsibilities that go with 
them. Rights, economic rights and po- 
litical rights, always impose responsibili- 
ties, and no man is fit to exercise a right 
of any kind unless he is willing fully to 
meet the responsibilities and obligations 
that go with it. 

Such is the fundamental basis of organ- 
ized human society. Nor can organized so- 
ciety, at the present stage of civilizing pro- 
cesses, exist upon any other conceivable 
basis. We must give way to the law of 
change, to be sure, for society is in a ,state 
of perpetual flux; but change should be 



From the School of Utilitarian Economics 253 

normal, easy, and with due regard always 
for the utilitarian principle of the greatest 
good for the greatest number of human be- 
ings. 

Real progress is made only when the 
change is in harmony with this utilitarian 
principle. Change which cuts into the nor- 
mal flow of events, upsets the orderly pro- 
cesses of society, wastes vast quantities of 
blood land treasure, and halts the usual in- 
dustrial and commercial energies of society, 
too often inflicts upon society injuries and 
hardships that are avoidable ; and changes 
of this kind usually come because of a lack 
of intelligent understanding of our eco- 
nomic relationships, and of a failure, on 
our part, to meet squarely our economic re- 
sponsibilities and obligations. 



254 Fi-fty Lessons on Utilitarian Economics 



Luxuries 



Economic Function and Value of Bo-Galled 'Non-Essentials 
— Who Is Most Benefitted hy Making and Selling Luxuries — 
Big Part of Pay Roll Depends on Traffic in Luxuries — When 
Luxuries Are Not Luxuries, 

Lesson No. 1^9 

This outline of economics, viewed from 
a utilitarian standpoint, would be disap- 
pointing to thoughtful readers if it did not 
contain some reference to the much discuss- 
ed problem of luxuries. 

What, in an economic sense, is a luxury? 

The question is not easily answered. 
Sometimes what is a luxury to one man is 
not a luxury to another. In some instances 
one man's luxury is another man's neces- 
sity. It will be evident, on reflection, that 
luxury is a word we cannot put into a 
kind of verbal straight jacket by saying 
that to all men, and in all circumstances, it 
shall mean the same thing. 

For utilitarian purposes we might define 
anything not actually necessary to the com- 
fort and well being of the citizen who owns 
or possesses it as a luxury, though this 
definition is not satisfactory. However, it 
will afford us a sufficiently definite basis 



From the School of Utilitarian Economics 255 

upon which to rest a few conclusions with 
respect to the function of luxuries in mod- 
ern industrial life. 

Here again we are inclined to ask : Who 
derives most benefit from luxuries — owners 
or makers? 

Luxuries often are idle, as in the case of 
jewelry and other personal ornaments. 
Take a diamond ring or necklace, for in- 
stance. The owner merely wears it. That, 
in most cases, is pleasurable to the wearer. 
But diamonds will not keep the body warm. 
As a fact diamonds, as ornaments, have 
only small utilitarian value from the stand- 
point of owners, and this value is an oc- 
casional value, for it depends upon social 
circumstances partly, and partly upon the 
moods of owners. 

But persons who have expended labor in 
the diamond industry have realized more 
substantial utilitarian values from this lux- 
ury. It has helped them to earn a living, 
to meet their own obligations and to ac- 
quire and enjoy those things that mean 
much more to them than diamonds would 
mean. 

That is true of any of our real luxuries, 
and it is true also of the vast number of 
things that are luxuries only in a relative 
sense. 



256 Fifty Lessons on Utilitarian Economics 

It is an economic truth not always recog- 
nized that a very large per cent of our pay- 
roll depends absolutely upon the traffic in 
luxuries. If we should suddenly quit mak- 
ing and selling luxuries vast armies of men 
and women would be thrown out of employ- 
ment. Nor would it be possible, as indus- 
try is now organized, for them to procure 
employment in fields devoted to the so- 
called economic essentials. 

We would have to bridge over a consider- 
able period of social and economic distress 
if we should force out of employment all 
the men and women who are now engaged 
in making and selling the things we some- 
times loosely class as luxuries. 

The conclusion is unescapable that many 
of our luxuries are really economic necessi- 
ties, and we will have to regard them as 
such until we reach a new and diffident 
stage in our industrial development. 



From the School of Utilitarian Economics 257 



Utilitarian Values 



Concluding Lesson in Series of Fifty Studies in Utili- 
tarian Economics — ''Greatest Good for Greatest Number" 
Discussed — Human Deficiencies — Deficiency a Tax on Effi- 
ciency — Importance of Self-Analysis — Gentler Utilitarian 
Values. 

Lesson No. 50 

In any discussion of utilitarian values 
we must take into account, not human per- 
fection only, but human imperfections also, 
for the doctrine of ^^the greatest good for 
the greatest number'' means something 
more, something larger and grander than 
the greatest good for a limited number. 

There are deficiencies in the human rec- 
ord. Some of these deficiencies are nat- 
ural, logical, and therefore inevitable. Oth- 
ers are avoidable. All of them are very 
real. Deficiency is a tax upon efficiency. 

No man or woman, sound mentally and 
morally, and able to do a little more than 
hoe their own row, would care to dodge 
even so much as a tithe of their responsibil- 
ity to help in caring for the economically 
deficient in our social order. 

There are many types and grades of 
men and women on the rungs of our eco- 



258 Fifty Lessons on Utilitarian Economics 

nomic ladder. Rung by rung, each type 
and each grade must make whatever head- 
way they are (capable of making in efforts 
to arrive at the top. That is what we mean 
by equal opportunity. Let men and women 
freely do the things they are best fitted to 
do, the things they like to do, the things 
that make them happy, and let them do 
it in their own way and on their own terms, 
unbossed by unrelated persons, uninflu- 
enced by group affiliation, for in no other 
way can we realize the best there is in 
each individual, and thus raise the general 
mass of human beings to higher, more pro- 
ficient and happier social and economic 
levels. 

All men and women can never rise to the 
same social and economic plane. Some of 
them will reach the highest rung of the 
ladder, some of them will get little above 
the lowest, and all along between the 
highest and the lowest of our type, we will 
find intermediate types on rungs in be- 
tween the highest and the lowest; and 
these, too, will fall into different grades, 
no two of them being exact equals in skill, 
strength and general social and economic 
efficiency. But each man and each woman, 
assuming approximately mental and phys- 
ical normality, is a potential unit in this 



From the School of Utilitarian Economics 259 

economic complex, and is capable of enjoy- 
ing and bestowing utilitarian values of pro- 
found meaning and benefit alike to them- 
selves and to society. 

What we should first learn in economics 
is the nature and extent of the possible 
utilitarian values inhering in our own nat- 
ures. I ask myself: Who am I? What 
thing can I do best? What is the nature 
of my skill or my talent? Where is my 
place in this big, intricate and wonderful 
scheme of useful human endeavor? Where 
is my supreme work? There is a GREAT 
WORK for each of us. Our problem al- 
ways is to find it. But we cannot find it 
unless we first find ourselves. We must 
know, not only what we are fit to do, but 
also our inaptitudes; for the man who 
knows his own limitations, his deficiencies, 
his mental and physical shortcomings, also 
knows his strength, his virtues, and falls 
easily into the place where he can give 
maximum expression to the best there is in 
his nature. The world is not overstocked 
with such men. Always and everywhere, 
without regard to race or country, we find 
men burning the taper of the candle down 
to the last dim flicker in vain and tragic 
efforts to fit square pegs into round holes. 

There is but one GREAT TRUTH that 



260 Fifty Lessons on Utilitarian Economics 

will make a man wholly free, and that is 
the truth about self! 

We climb upon the scales, drop a penny 
in the slot, note the hand on the dial, and 
conclude that we are thus much, in bulk; 
or we read the lines of face and body in the 
mirror, and conclude that here we are face 
to face with self; but these tests do not 
give us even a shadowy outline of that com- 
plex of energies, of talents, of aptitude, of 
weaknesses and of strength that enter into 
the making of that wonderfully intricate 
and potential spark of life we speak of as 
self. 

Many men and women go through life 
without once fully realizing who and what 
they are. 

It is good for me to know me; not the 
superficial, shallow, exaggerated me, but 
the real me, me in the last analysis, with- 
out trappings or camouflage — me for what 
and all that I am in all my social and eco- 
nomic relations — for when I have come 
into this knowledge all else will be easy 
and well, for I shall then know what work 
I am to do in the vineyard, how and when 
I shall do it, and upon what fair terms, and 
will go my way happily and unafraid. 

Not without purpose are we thus stress- 
ing the importance of self-analysis, for no 



From the ScJiool of Utilitarian Economics 261 

student can grasp the full purport of utili- 
tarian economics, or form any fair concep- 
tion of the meaning and function of utili- 
tarian values, without first understanding 
self and the relation between self and the 
balance of mankind. 

In the course of these studies we have dis- 
cussed utilitarian values largely from a 
material point of view. Nor is this aspect 
of utilitarian values unimportant. But 
there are gentler utilitarian values also. 
We find them in our great philanthropies, 
our great benevolences; we find them in the 
sentiments that move us to lift the fallen 
wayfarer to his feet, to care for the halt, 
the lame and the blind, and to cherish and 
succor the orphaned children of the world; 
we find them in the confidence and fellow- 
ship of friends, in the mutual good will and 
cheerful comradeship of our brothers of all 
races, all lands and all creeds; and when 
we have brushed the world and its cares 
aside for the day, and steal away to the 
sweet seclusion of our own roofs, we find 
them again in the shining faces and open 
hearts of our own hearthstone, in the 
laughter and happiness of our children and 
in the tender reliance and helpful support 
of the mothers of our race. 



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